TSMC announces 2023Q3 financial report: Advanced technology revenue accounts for nearly 60%

Yesterday, Taiwan Semiconductor Manufacturing Company (TSMC) unveiled its financial results for the third quarter of 2023. The disclosed revenue amounted to an impressive NT$546.73 billion, marking a year-over-year decline of 10.8% but showcasing a sequential growth of 13.7%. When evaluated in US dollars, the revenue stood at $17.28 billion, registering a year-over-year dip of 14.6% and a quarter-over-quarter surge of 10.2%. This figure squarely lands within TSMC’s prior revenue projection, ranging from $16.7 billion to $17.5 billion.

For Q3 2023, TSMC’s net profit clocked in at NT$211 billion. After dilution, earnings per share (EPS) were NT$8.14 (or $1.29 per ADR unit), revealing a 24.9% decline when juxtaposed against the same period the previous year. In comparison with Q2 2023’s financial statements, the third quarter net profit saw an uptick of 16.1%.

During the second quarter of 2023, TSMC’s gross margin, operating profit margin, and net margin post-tax were 54.1%, 42%, and 37.8%, respectively. Fast-forward to the third quarter and the gross margin witnessed a subtle increase to 54.3%. Conversely, the operating profit margin retreated slightly to 41.7%, while the post-tax net margin advanced to 38.6%.

In the context of Q3 2023, the shipment volumes for the 3nm, 5nm, and 7nm processes respectively contributed to 6%, 37%, and 16% of the total revenue. In sum, these processes constituted a commendable 59% of the sales revenue, a notable rise from the preceding quarter’s 53%. With the 3nm process transitioning into mass production, advanced processes — defined by TSMC as 7nm or more sophisticated technologies — now represent nearly three-fifths of TSMC’s revenue.

TSMC attributed the revenue for Q3 2023 to the mass production of the 3nm process and heightened market demand for the 5nm process. However, a portion of the gains was offset by ongoing inventory adjustments by clients. Looking ahead, TSMC anticipates Q4 2023’s performance to be bolstered by the 3nm process, though part of the increase may still be counteracted by customer inventory adjustments. For the upcoming quarter, revenue is projected to oscillate between $18.8 billion and $19.6 billion (assuming an average exchange rate of 32 NT$ to $1). Gross margins are forecasted to hover between 51.5% and 53.5% while operating profit margins are estimated to lie in the range of 39.5% to 41.5%.