TSMC Reports 80 Percent Year-on-Year Surge in Quarterly Profit, Strongest Growth in 2 Years

TSMC shares jumped more than 4 percent on Friday morning, outperforming the broader market, after the Taiwanese chipmaker announced a forecast-beating third-quarter profit, though it struck a more cautious note on upcoming demand.

Taiwan Semiconductor Manufacturing Company (TSMC), a major Apple supplier and the world's largest contract chipmaker, posted on Thursday an 80 percent on-year surge in profit for the July-September period of 2022, the strongest growth in two years.

However, the company also trimmed capital spending by at least 10 percent for this year. TSMC, Asia's most valuable listed company, said it was being more conservative in planning investments for 2023, but still expected "a growth year".

Analysts at Daiwa Capital Markets said investors should take advantage of the cheap stock — TSMC shares have fallen more than 30 percent so far this year — and noted the company had given "intact" guidance for the fourth quarter and 2023, despite cutting capex to optimise capacity amid a broad inventory correction.

"Although this correction will likely result in suboptimal loading for TSMC in 1H23, it is well in our expectation and, more importantly, we stick with our view that TSMC this time will be counter-cyclical, weathering better than peers through this correction into 2023," it said.

Morningstar said in a research note that TSMC shares were cheap on long-term computing growth, especially growth for artificial intelligence, Internet of Things, and high-performance computing "may last for decades".

Shares in TSMC's smaller Taiwanese competitor, United Microelectronics, were also up more than 4 percent on Friday morning. It reports third-quarter earnings on October 26.

© Thomson Reuters 2022