Image source: TSMC
Prospects for TSMC still positive despite 10% revenue drop in Q2: analyst
The firm will continue to benefit from robust demand for chips in the years to come.
The long-term outlook for Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, remains bright even after posting a 10% revenue drop in the second quarter, according to Wedbush Securities.
Wedbush equity research analyst Matt Bryson has lowered their revenue forecast for the company this year but maintained its “outperform” rating on the back of strong longer-term growth expectations. The investment rating meant the total return of the stock will outperform its peers over the next six to 12 months.
“TSMC remains uniquely capable in providing leading edge production, a result that we believe will position it to continue to maintain a higher share of advanced ICs (and stronger than historic margins),” Bryson said in a 20 July research note.
TSMC saw its net revenues fall 10% to NT$480.84b ($15.4b) last quarter from NT$534.14b in the same period last year. Its net income also plunged 23% to NT$181.72b that quarter from NT$237b a year ago.
Compared to the first quarter, the latest figures represented a 5.5% dip in revenue and a 12.2% decline in net income, according to its earnings results released last week.
The steeper-than-expected drop forced the firm to lower its full-year revenue forecast for 2023 by 10% from previous expectations, while reiterating that revenues, in USD, will still deliver a compound annual growth rate of 15% to 20% in the coming years.
Wedbush also cut its revenue estimates for the third quarter by 9% to NT$528.8b, and trimmed its full-year forecast by 4% to NT$2.1t from NT$2.19t, previously.
For 2024, its revenue forecast was raised by 1% to NT$2.5t from previous estimates, while TSMC is expected to grow revenues further to NT$2.85t in 2025.
Bryson said robust demand for semiconductors in end markets such as 5G, high-performance computing, auto, and the Internet of Things (IoT) will support the chipmaker’s growth in the long term.
“Despite the softer near-term outlook, which we view as macro driven rather than specific to TSMC, we remain positive on the stock,” he added.
