Revenue for Taiwan Semiconductor Manufacturing Co. (TSMC) topped analysts' estimates in the third quarter and reached $19.4 billion. On Friday, the company reported that earnings in Q3 2022 were 48% higher compared to the same quarter a year ago.
TSMC revenue in July (NT$186.76 billion), August (NT$218.13 billion), and September (NT$208.25 billion) totaled NT$613.14 billion ($19.382 billion), which is about 48% higher than in Q3 2021, according to a Bloomberg report. TSMC's results run contrary to other semiconductor companies. Just yesterday, AMD warned of a $1.1 billion revenue shortfall, whereas Kioxia decided to reduce the output of 3D NAND wafers last week.
But while TSMC now controls a bigger portion of the market than it used to just a couple of years ago, the company's capitalization fell 29% this year as investors worry about potential revenue drop in the coming months as fabless chip designers slash their orders due to dropping demand, Bloomberg reports.
Another factor that increases investors' concerns about TSMC is the company's investments in new capacities in Taiwan and overseas (the U.S. and Japan). Analysts from Morgan Stanley believe that demand for chips will increase again in the second half of 2023. This is before TSMC's new production capacity comes online, but investors are still worried about the company's margins.
"For now, overseas capacity expansion will be front and center, especially in the U.S. and Japan, as TSMC pushes to meet customers' diversification requests and rises to the challenge of growing competition from Samsung and Intel," wrote Charles Shum, an analyst with Bloomberg Intelligence, in a note to clients. "Rapidly rising depreciation and material costs, coupled with increasing uncertainty in smartphone demand, are putting a cap on its gross margin."
