Taiwan Semiconductor Stock Falls After Q2 Earnings - How Did It Perform?

Taiwan Semiconductor Manufacturing Company Ltd TSM stock traded lower Thursday after reporting a second-quarter revenue decline of 13.7% year-on-year to $15.68 billion, beating the consensus of $15.49 billion.

In Q2, shipments of 5 nm accounted for 30% of total wafer revenue, and 7- nm accounted for 23%. Advanced technologies, defined as 7-nm and more advanced technologies, accounted for 53% of total wafer revenue. 

EPS of $1.14 beat the consensus of $1.08.

The gross margin contracted by 500 bps to 54.1% due to lower capacity utilization and higher electricity cost. The operating margin declined by 710 bps to 42%. TSMC held $47.9 billion in cash and equivalents.

“Our second quarter business was impacted by the overall global economic conditions, which dampened the end market demand, and led to customers’ ongoing inventory adjustment,” said Wendell Huang, VP and Chief Financial Officer of TSMC. 

“Moving into third quarter 2023, we expect our business to be supported by the strong ramp of our 3-nanomenter technologies, partially offset by customers’ continued inventory adjustment.” 

Outlook: The Apple Inc AAPL and Nvidia Corp NVDA supplier projected a 10% fall in sales in FY23, versus previous guidance for a single-digit decline (against the consensus of $70.39 billion), Bloomberg reports.

TSMC expects Q3 revenue of $16.7 billion - $17.5 billion vs. consensus of $17.68 billion. It expects a gross margin of 51.5% - 53.5% and a 38% - 40% operating margin.

TSMC disclosed postponing production at a planned facility in Arizona from late 2024 until 2025 as Washington tries to establish a more robust chip industry.

Price Action: TSM shares traded lower by 3.32% at $99.64 premarket on the last check Thursday.