Taiwan Semiconductor Company’s profit falls for the first time in 4 years—AI still hasn’t helped

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Taiwan Semiconductor poured a bucket of cold water in the hope that the chip would recover. The world’s largest contract chipmaker is still grappling with a slump in demand for electronic devices, which is a bad sign for rivals like

smart
.

Taiwan Semiconductor (ticker: TSM) is dominating the high-end chip market, and its stock is benefiting from excitement over artificial intelligence applications. However, it is currently feeling the effects of a fall into the purchase of smartphones and other devices as it reported its first quarterly profit drop in four years on Thursday.

TSMC as the main processor inside Apple (code: AAPL) iPhone, Qualcomm (QCOM) mobile chipsets and processors manufactured by Advanced micro-devices (AMD).

“Our second-quarter business was impacted by overall global economic conditions, which reduced end market demand and resulted in customers continually adjusting inventories,” Chief Financial Officer Wendell Huang said in a statement.

TSMC’s US deposit receipts fell 2.6% in premarket trading on Thursday, having risen 38% this year by Wednesday’s close. America’s main rival

smart

(INTC) down 1%.

Although TSMC is expected to profit from the growth of AI chips, which is a major supplier for

Nvidia

(NVDA), currently the market is still too small to offset weaker demand for smartphones and PCs. TSMC’s smartphone revenue fell 9% quarter-on-quarter.

TMSC said its second-quarter profit hit NT$181.80 billion ($5.84 billion), down from NT$237.03 billion in the same period in 2022. Revenue fell 10 percent to NT$480.84 billion. Revenue in US dollars was $15.68 billion, down 14% year-on-year.

TSMC said it expects third-quarter revenue of $16.7 billion to $17.5 billion and an operating margin of 38% to 40%.

“Move into [the] By the third quarter of 2023, we expect our business to be supported by strong growth in 3-nanometer technology, offset in part by customers constantly adjusting inventory,” Huang said.

TSMC reiterated its forecast for capital spending to stay at the lower end of its previous forecast range of $32 billion to $36 billion, as it continues. its investment in Arizona. Faced with a challenge to chip production from Intel, TSMC is hoping its strategy of placing its facilities globally can attract customers worried about the future of Taiwan, which China views as a breakaway province it plans to reunify with the mainland.

Write to Adam Clark at [email protected]