According to data provided by Counterpoint to China Business News, in the second quarter of this year, TSMC’s share of the global foundry market was approximately 57%, an increase of 1 percentage point year-on-year but a decline of 2 percentage points quarter-on-quarter. The declining market was shared by Samsung Electronics, MediaTek and SMIC. Taiwanese semiconductor giant TSMC announced its third-quarter results on October 19.
According to financial report data, TSMC’s net revenue in the third quarter was NT$546.73 billion, a year-on-year decrease of 10.8%, and a month-on-month increase of 13.7%; the third quarter net profit was NT$210.8 billion, a year-on-year decrease of 25.0%, and a month-on-month increase of 16.0%.
In addition, TSMC’s gross profit margin for this quarter was 54.3%, operating profit margin was 41.7%, and net profit margin was 38.6%. In the third quarter, TSMC’s 3nm shipments accounted for 6% of total wafer revenue; 5nm accounted for 37%; and 7nm accounted for 16%.
As we enter the second half of 2023, although the PC, smartphone and consumer electronics markets have shown signs of bottoming out and rebounding, the industry is worried that the recovery progress will be slower than expected and the market will not usher in a very strong rebound. TSMC CEO Wei Zhejia also maintained his consistent cautious attitude towards the demand for consumer electronics products during the earnings conference call. "As overall macroeconomic conditions continue to be weak, customers remain cautious about inventory control. This is why we expect inventory digestion to continue in the fourth quarter." Wei Zhejia said.
Market research firm Counterpoint analyzed China Business News and pointed out that the current overall capacity utilization rate of the market has bottomed out in the second quarter of 2023. However, due to the continued adjustment of PMIC and MCU inventories, the 8-inch process continues to be affected. Weak terminal demand has led customers to be cautious in placing orders with TSMC, and TSMC is expected to accumulate inventory in the second half of 2023.
According to data provided by Counterpoint to China Business News, in the second quarter of this year, TSMC’s share of the global foundry market was approximately 57%, an increase of 1 percentage point year-on-year but a decline of 2 percentage points quarter-on-quarter. The declining market was shared by Samsung Electronics, MediaTek and SMIC.
Regarding the automotive and industrial platforms and artificial intelligence businesses that TSMC has been actively seeking to expand recently, Wei Zhejia warned that the demand for artificial intelligence is "not enough to offset" the weakening demand for chips in consumer electronics products. "As we enter the fourth quarter of 2023, artificial intelligence-related demand continues to be strong, but this is not enough to offset the overall cyclical nature of our business," he said.
It should be noted that artificial intelligence semiconductors currently account for 6% of TSMC's total revenue in 2023. However, just one day before the financial report is released, the United States updated the export control regulations for artificial intelligence chips, and the export of chips such as Nvidia's A800 and H800 to China will be affected. At the performance briefing, TSMC gave its latest response to this export control. TSMC admitted that the new regulations may prevent some products from being shipped to mainland China, and the company has been assessing the impact in the past few days. At present, the impact on TSMC is controllable.
However, in order to maintain revenue, TSMC is currently launching a price increase strategy. A number of downstream manufacturers recently confirmed that TSMC has released its 2024 foundry quotation strategy to customers. Based on the order size, the foundry quotation below 7 nanometers will increase by another 3% to 6%. Many major manufacturers such as Nvidia, MediaTek, and AMD are willing to accept the increase. Industry insiders analyze that the increase in TSMC's foundry quotations can help it offset its high overseas factory construction and operating costs, and keep its long-term gross profit margin at the 53% target.
At the performance briefing, Wei Zhejia revealed the latest progress in TSMC's overseas factory construction. He said that TSMC plans to start large-scale production in Arizona, USA, in the first half of 2025. TSMC's Japanese factory plans to start mass production at the end of 2024.
At the same time, he also revealed that TSMC is expected to mass-produce 2-nanometer chips in 2025. In this regard, Synopsys told China Business News that its customers have taped out a number of chips on TSMC's 2nm process and have certified analog and digital design processes.
Synopsys said that the digital design process of TSMC's 2nm N2 nanosheet process is achieving multiple tape-outs, while the analog design process has been adopted in multiple design starts. Samples are expected to be available in 2024.
Looking forward to the fourth quarter, TSMC expects fourth-quarter sales of US$18.8 billion to US$19.6 billion, with gross profit margins of 51.5% to 53.5%.