Taiwan Semiconductor Dodges Chip Sector Weak spot

Taiwan Semiconductor Manufacturing (TSM), the world’s largest chip foundry, on Friday reported better-than-expected sales for September. The news came after major customer Advanced Micro Devices (AMD) warned that its third-quarter sales missed views on weak PC demand.


Taiwan Semiconductor, better known as TSMC, reported the equivalent of $6.68 billion in September sales. Its revenue rose 42.6% in local currency year over year but fell 4.5% from August. TSMC posts results in new Taiwan dollars.

TSMC’s sales for the third quarter totaled the equivalent of $20.2 billion. Analysts polled by FactSet were looking for $19.7 billion. TSMC plans to report Q3 earnings next Thursday.

Taiwan Semiconductor produces chips for fabless semiconductor firms such as AMD, Apple (AAPL), Nvidia (NVDA), Qualcomm (QCOM) and others.

Taiwan Semiconductor Guidance In Focus

“We don’t believe TSMC is immune from deteriorating end-market conditions, with AMD’s miss the latest reminder of weakening end markets,” Wedbush Securities analyst Matt Bryson said in a note to clients. “However, we do think that TSMC will outperform markets in general due to continued share gains.”

Bryson rates Taiwan Semiconductor stock as outperform.

Susquehanna Financial Group analyst Mehdi Hosseini reiterated his neutral rating on TSMC stock.

In a note to clients, Hosseini said he expects TSMC to lower its revenue outlook and capital expenditure plans for 2023. He cited customers dealing with high inventories and weakening demand.

AMD Stock Tumbles On Q3 Sales Miss

Late Thursday, AMD announced preliminary results for the third quarter that were much weaker than forecast. It now expects revenue of $5.6 billion, vs. its prior target of $6.7 billion. It blamed soft PC chip sales, which fell 40% year over year in the quarter.

However, data center, gaming and embedded chip sales grew significantly year over year and were in line with expectations, AMD said. Total revenue rose 29% in Q3. It will report official results on Nov. 1.

On the stock market today, Taiwan Semiconductor stock slid 6.2% to 69.75 amid an overall rough day for stocks. AMD stock plummeted 13.9% to close at 58.44.

The Philadelphia semiconductor index, known as SOX, dropped 6.1% on Friday. The SOX includes the 30 largest semiconductor stocks traded in the U.S. Year to date, the SOX is down 40.3%. Makers of memory chips and PC processors have been hardest hit lately because those segments have seen sales decline.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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