TSMC Q4 profit to dip 23%, analyst foresee positive growth in FY25

TSMC Q4 results: Taiwan Semiconductor Manufacturing Co Ltd is expected to announce a 23 per cent decline in fourth-quarter profit on Thursday. However, analysts foresee a positive growth trajectory for the company in the coming year, propelled by recovering demand. The projected profit dip is attributed to the robust performance witnessed in 2022, when the company, boasting clients like Apple (AAPL.O) and Nvidia (NVDA.O), benefited from heightened post-pandemic demand.

As per an LSEG SmartEstimate, drawing insights from 20 analysts, TSMC is poised to reveal a net profit of T$226.4 billion ($7.21 billion) for the October to December period. This marks the third consecutive quarter of profit reduction, compared to the year-earlier net profit of T$295.9 billion.

Despite global semiconductor demand tapering off in the latter part of 2022, analysts suggest that depleting inventories at smartphone and computer manufacturers could drive restocking demand.

TSMC’s outlook for current year

Of particular interest on Thursday will be TSMC's outlook for the current year. Fubon Securities analysts, who previously expressed apprehension about TSMC's first-quarter outlook, now believe that Apple wafer demand will remain steady in the short term.

KGI Securities analysts anticipate outperformance in first-quarter sales against typical seasonal slowdown, projecting mid-20 per cent top-line growth in U.S. dollar terms for the entire year. This growth is attributed to demand recovery and increased silicon content driven by 5G and high-performance computing applications.

The surge in the share price of Asia's most valuable company, up 32 per cent in 2023, primarily stems from the AI boom. TSMC's Taipei-listed stock outpaced the broader market's gain of 27 per cent (.TWII).

TSMC is scheduled to report at 0600 GMT on Thursday.

(With Reuters inputs)