Shares of Taiwan Semiconductor Manufacturing Company (TSMC) soared after the chipmaker reported a profit for the third quarter of 2022 that topped expectations despite the company’s more cautious stance than normal on impending demand. However, the company’s stock has so far lost a third of its value in 2022 due to concerns about waning consumer electronics demand globally amid decades-high inflation, increasing interest rates, and COVID-19 lockdowns in China.
TSMC, the world’s largest contract chip manufacturer and a major Apple Inc. supplier reported that its net profit for the three months ending in September 2022 increased by 80% over the same period in 2021 due to robust sales of its cutting-edge chips, which are used in smartphones and other gadgets. Revenue from the smartphone market climbed by 25% from the previous quarter and contributed 41% of TSMC's third-quarter revenues, while the high-performance computing industry contributed 39%.
Despite announcing a record quarterly profit jump, the company reduced its capital expenditure projection for this year by around 10% in response to challenges including sluggish global chip demand and rising costs. TSMC reduced its capital expenditure prediction for 2022 to $36 billion in contrast to a previous target of at least $40 billion.
The management of TSMC warned that the whole semiconductor industry is expected to decline in 2023. The indications of the semiconductor industry's decline follow a period of skyrocketing sales during the COVID-19 pandemic, which increased demand for personal computers, gadgets, and data servers. Other semiconductor companies are facing challenging conditions. Samsung Electronics Co., the world’s biggest chip maker by revenue, projected that operating profit for the third quarter of 2022 would fall about a third compared to 2021. After providing a subdued outlook, Advanced Micro Devices Inc. also reduced its third-quarter sales projections. According to AMD, the PC industry has suffered greatly in recent months.
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