Analysts Expect a 30% Drop in TSMC’s Profit, but It’s Temporary

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On Thursday, TSMC (Taiwan Semiconductor Manufacturing Company) is set to report its financial results for the third quarter. Preliminary estimates suggest that the company has reduced its revenue by 11% for the period, falling short of investors’ expectations of a 20% decline. Many analysts no longer hold optimistic views regarding TSMC’s financial performance for this half of the year, and they prefer to look ahead to the next year with cautious optimism.

As previously highlighted, TSMC’s short-term statistics are inevitably affected by the challenging comparison with the high base formed a year ago. In this context, the initial forecast of a 20% quarter-on-quarter revenue reduction and a 30% decrease in net profit to $6 billion, mentioned by analyst consensus as reported by Reuters, looks discouraging.

For instance, representatives of Morgan Stanley expect TSMC’s revenue to grow by 10% in the fourth quarter of this year and urge investors to prepare for more robust dynamics. At least the high demand for expensive components for artificial intelligence systems allows experts to form such expectations. TSMC’s shares have risen by 23% since the beginning of the year, largely due to similar anticipations, even though the company’s management mentioned three months ago that the rise in this field wouldn’t fully offset the decline in the consumer-class components segment.

As per the LSEG SmartEstimate survey, the consensus among 19 analytical agencies suggests the possibility of TSMC’s revenue growth by 22% in the next year. Fubon Securities representatives go further, believing that the company’s revenue will increase by 10% already in the first quarter of 2024. However, some of TSMC’s clients might scale back their orders by the end of this year, with Apple among them. Apple could reconsider the production volumes of its latest smartphones and potentially reduce them. It’s worth noting that TSMC itself expects a 10% revenue decline by the end of this year, but it’s uncertain whether the situation will improve as the year-end approaches.

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Vasyl Kolomiiets
Vasyl Kolomiiets
I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.

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