Taiwan Semiconductor Manufacturing Company (TSMC) reported a higher-than-expected Q3 net income of NT$211 billion ($6.5 billion) on Thursday, thanks to a depreciating Taiwanese dollar and an 11% drop in revenue, which was less severe than anticipated. The firm's substantial investment of $25.2 billion in capacity growth during the first nine months of 2021 could lead its 2023 capital expenditure towards the lower end of the $32-$36 billion target, according to real-time metrics from InvestingPro.
As the primary AI accelerator chip supplier for Nvidia (NASDAQ:NVDA), TSMC is thriving despite production limitations that are expected to last until 2024 and a sluggish global economy. The strong demand for AI, driven by applications such as ChatGPT, has been a significant factor in this success. InvestingPro Data shows that TSMC has been able to maintain an impressive gross profit margin of 58.63% and a high return on assets of 20.34%, which are indicators of a well-managed and profitable company.
Charles Shum, a Bloomberg Intelligence analyst, has suggested that TSMC is well-positioned to withstand US restrictions on AI chip sales to China. This resilience is reflected in the company's financial performance, with an adjusted market capitalization of $441.09 billion and a P/E ratio of 14.8, as per InvestingPro Data.
The company's reduced capital spending was mirrored in a significant decrease in Q3 order bookings from Dutch chipmaking gear supplier ASML Holding NV (AS:ASML). Murata Manufacturing Co (OTC:MRAAY)., a key player in the smartphone market, projects a surge in the sector this year. This could potentially increase demand for TSMC’s iPhone chips, despite ongoing Covid lockdowns and China's uneven economic recovery. TSMC's ability to consistently increase its earnings per share and its history of having raised its dividend for 3 consecutive years, as noted in InvestingPro Tips, further underscore its financial resilience.
In conclusion, TSMC's robust Q3 performance and projected lower 2023 capital expenditure demonstrate its ability to navigate global economic challenges while maintaining its position as a leading player in the semiconductor industry. For those interested in more insights, InvestingPro offers 22 additional tips on TSMC, available to subscribers at InvestingPro.
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