TSMC raises revenue outlook in strong signal for tech demand

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(Bloomberg). — Taiwan Semiconductor Manufacturing Co. has raised its revenue growth forecast for this year. This is the latest sign that global electronics demand has been more resilient than expected.

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The world’s largest contract chipmaker is now projecting sales growth in the mid-30% range, up from about 30% previously. It also forecasts revenue between $19.8 billion and $20.6 billion for September quarter, surpassing estimates of approximately $18.5 billion.

The outlook from Apple Inc.’s most important chipmaker may allay investors’ fears about an economic slowdown and soaring inflation hurting demand for everything from phones to cars. Last week, Samsung Electronics Co. also reported a better-than-anticipated 21% jump in revenue, triggering an Asian stock rally. TSMC’s role as the predominant manufacturer of advanced semiconductors also likely cushioned its profit margins during the downturn.

Click here for a liveblog of TSMC’s earnings call.

The world’s largest contract chipmaker booked NT$237 billion ($7.9 billion) in net income for the quarter ended June, surpassing the average estimate of NT$219.8 billion. According to previously reported, the revenue jumped 44% and reached NT$534.1billion in the second quarter. Based on Bloomberg data, its gross margin of 59.1% was its highest level in 26 years.

Concerns remain about rising inventories and the long-term consequences of a possible global recession. TSMC’s shares are down more than 20% this year alongside a sector-wide selloff. Executives announced on Thursday that the company would shift some of its planned spending on capacity and upgrades from 2022 to 2023 in response to the uncertainty and delays in equipment.

Credit Suisse analysts Randy Abrams and others said that TSMC remained one their top picks due to its market share gains, dominant position, and other factors.

TSMC, the world’s most advanced maker of silicon chips, has benefited from its most important customer. Five types of Mac chips have been launched by Apple in the last year and half. The Taiwanese firm also continues to ride the auto industry’s growing demand for semiconductors as cars become more digitized.

“We expect TSMC to report an upbeat 2Q and believe there is upside to consensus 2H22 and 2023 forecasts given the company’s solid share gains in” high-performance computing, Citi analysts wrote in a note.

Continue reading: TSMC Sales Rise 44% in another Sign of Resilient Tech Demand

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