(Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s fourth-quarter income beat estimates of a decline, as demand from synthetic intelligence gamers helped offset sluggish smartphone and laptop computer chip gross sales.
Most Learn from Bloomberg
Hsinchu-based TSMC, the primary chipmaker to Apple Inc. and Nvidia Corp., reported December gross sales of NT$176.3 billion ($5.7 billion), finishing a NT$625.5 billion quarter. That matched earnings from the identical interval a yr earlier, which was amongst TSMC’s highest quarterly outcomes. The typical analyst estimate for gross sales during the last three months was NT$616.2 billion.
Over the course of 2023, TSMC moderated its capital expenditure plans as the patron electronics business grappled with a glut of unsold stock. The chipmaker signaled the trough in demand had been reached in the summertime and restoration would start to take maintain within the months main as much as 2024. General income declined 4.5% final yr, to NT$2.16 trillion.
Whereas it outdid analyst expectations and its personal steering, TSMC’s $20.2 billion quarter nonetheless fell wanting delivering development. December gross sales have been down 8.4% on the identical month a yr earlier, providing a blended outlook for the yr forward. Executives together with Chief Government Officer C. C. Wei have mentioned they they anticipate total enterprise to develop this yr, and the corporate has seen its high-performance computing enterprise boosted by demand for Nvidia and Superior Micro Gadgets Inc.’s AI chips.
Earlier within the week, fellow chipmaker Samsung Electronics Co. posted its sixth successive quarter of declining working revenue, because it weathered the impression of muted shopper demand in its smartphone and reminiscence companies. Nonetheless, the newest report from the Semiconductor Business Affiliation confirmed the primary development in chip gross sales in over a yr got here in November, suggesting momentum is gathering for a resurgence in 2024.
Learn extra: World Chip Gross sales Return to Progress in Signal of Enhancing Demand
Upgrades to AI server farms and on-device AI purposes are prone to drive an IT alternative cycle, in line with HSBC analysts Ricky Website positioning and Hankil Chang. “For US cloud service suppliers, we anticipate capex to develop considerably, about 65% in 2024e. Moreover, AI server purchases will seemingly whole 57% of their investments in 2024e, up from 8% in 2022,” they wrote in a word on Wednesday.
Apple Inc., arguably TSMC’s most vital buyer, has confronted headwinds with its newest iPhone technology, particularly on the earth’s largest cellular market of China. A number of analysts have downgraded Apple this yr on expectations of sentimental demand, and this week Jefferies mentioned the iPhone gross sales stoop in China is prone to deepen. The US firm has additionally been hit by an expanded ban by Chinese language companies and state-owned corporations ordering workers to maintain iPhones and different overseas units away from work premises.
–With help from Sam Kim.
(Updates with extra market particulars)
Most Learn from Bloomberg Businessweek
©2024 Bloomberg L.P.