In a recent statement, Taiwan Semiconductor’s CEO, CC Wei, revealed an intriguing perspective on the company’s performance. While the demand for AI-related products remains strong, it appears to be insufficient in countering the cyclicality that plagues their business.
During the announcement of their latest financial results, Taiwan Semiconductor disclosed that their net profit for the third quarter experienced a 25% decrease, amounting to NT$211 billion. Simultaneously, sales took an 11% hit, plummeting to NT$546.73 billion ($17.3 billion). Remarkably, their earnings of $1.26 per U.S.-listed share exceeded analysts’ expectations, which were set at $1.15, as reported by FactSet.
What’s even more intriguing is that Taiwan Semiconductor surpassed its own operating margin projections with an impressive 41.7%, outperforming their expected range of 38% to 40%. As they look ahead to the fourth quarter, the company anticipates revenues between US$18.8 billion and US$19.6 billion, accompanied by an operating margin ranging from 39.5% to 41.5%. This forecast is notably higher than the $18.54 billion in revenue expected by analysts surveyed by FactSet.
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In response to these figures, U.S.-listed shares demonstrated a 2% rise in premarket trading, reflecting investors’ renewed confidence in the company’s performance.
However, Wei clarified that a consistent decline in the overall macroeconomic climate, along with sluggish demand recovery in China, has left customers cautious in managing their inventories. Consequently, Taiwan Semiconductor anticipates the continuation of inventory digestion in the fourth quarter. Despite this, Wei noted a glimmer of hope as the PC and smartphone end markets display early signs of demand stabilization.
In this astonishing revelation, Taiwan Semiconductor’s CEO highlights the delicate balance between the robust AI-related demand and the ever-present cyclicality in their business, leaving investors and industry observers eagerly awaiting the company’s next strategic move.
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