TSMC announced a decline in its profits in the second quarter of 2023, and highlighted that net revenue for the quarter was NT$480.84 billion. This is down 5.5% from the Q1 figures of NT$508.63.
The decline in electronics demand meant that Taiwan Semiconductor Manufacturing Company (TSMC) experienced its first profit decline in the past four years, in the second quarter of 2023. The company is one of the largest manufacturers of advanced processors, for which demand has soared during the global lockdown. While people were forced to stay at home, workers needed to work in the comfort of their own homes but needed the tools to stay productive.
Hence, the sales of computers and other electronics advanced, and TSMC saw huge productions due to the high demands on its processors. There have been large purchases of laptops and smartphones, causing stores and supermarkets to stock up on chips. Post-pandemic is here, and many of these companies are now grappling with investor oversupply as consumers have cut back on these commodities. Apart from the restrictions imposed on life and the gradual return to normal life, the increasing inflation has also affected the pockets of the citizens. People are now spending more on necessities like food, other than electronics.
TSMC sees its first profit decline in 4 years in the second quarter of 2023
reporting Reflecting its profit decline in the second quarter of 2023, TSMC highlighted that net revenue for the quarter was NT$480.84 billion. This is down 5.5% from the Q1 figures of NT$508.63. According to TSMC, the second quarter revenue decline was caused by the general global economic situation. The company explained that the financial situation blocked the low demand and caused an adjustment to the current consumer inventory. Net revenue for the second quarter decreased 10% from NT$534.14 billion in the second quarter of 2022. The manufacturer attributed 6% of its total net revenue to consumers in North America. TSMC also mentioned that China accounted for 12% of total net revenue in the second quarter of 2023. Other regions that contributed to total net revenue were Asia Pacific (8%), EMEA (7%), and Japan (7%). Notably, the last time TSMC reported a decline in net income before the second quarter of 2023 was the first quarter of 2019.
Furthermore, TSMC disclosed that its operating margin was 42%, down 3.5% points from Q1 2023 and 7.1% points from Q2 2022. TSMC also reported in its Q2 2023 financial results that its gross margin fell 2.2% percentage points to 54.1%. Gross profit was 2.2% points to 54.1%.
The global smartphone market fell 11% in the second quarter compared to the same period in 2022, data statistics provider Canalys said, another focus of the current difficult time at TSMC. The semiconductor maker’s largest customer, Apple (NASDAQ:AAPL), noted that sales fell during its fiscal second-quarter earnings. However, Canalys pointed to some signs of recovery in the smartphone market. If the data insights provider is right, TSMC could be looking at some better days ahead.
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Ibukun is a crypto/financial writer interested in passing on relevant information, using uncomplicated words to reach all types of audiences. Apart from writing, she loves watching movies, cooking, and exploring restaurants in the city of Lagos where she is staying.
