Taiwan Semiconductor Manufacturing Co. (TSM) – Get Free Report shares moved firmly higher Thursday after the world’s biggest contract chipmaker and a lead supplier for Apple (AAPL) – Get Free Report iPhones posted record December quarter profits, but lowered its capital spending plans amid a pullback in global demand.
TSMC said profits for the three months ending in December got here in at T$295.9 billion ($9.72 billion), up 78% from the identical period last yr, as revenues rose 26.7% to $19.93 billion, a figure it expects to ease to between $16.7 billion and $17.5 billion over the primary three months of the yr.
Consequently, TSMC trimmed its 2023 capital spending plans to a variety of between $32 billion and $36 billion, down by around $36.3 billion over the entire of 2022.
“Our fourth quarter business was dampened by end market demand softness, and customers’ inventory adjustment, despite the continued ramp-up for our industry-leading 5nm technologies,” said CFO Wendell Huang. “Moving into first quarter 2023, as overall macroeconomic conditions remain weak, we expect our business to be further impacted by continued end market demand softness, and customers’ further inventory adjustment.”
TSMC’s U.S.-listed shares were marked 2.1% higher in pre-market trading to point a gap bell price of $83.75 each. Apple shares, meanwhile, were up 0.19% at $133.75 each.
TSMC’s fortunes are crucial to the U.S. chip sector, which is looking to cut back its reliance on China-made semiconductors amid a push for brand new investment and domestic production expansion from President Joe Biden.
The group will likely have its $12 facility in Arizona, which is predicted to create 1,600 U.S.-based jobs, up and running next yr, with plans for a brand new pant within the state recently unveiled during an event that included Nvidia (NVDA) – Get Free Report CEO Jensen Huang, Apple’s Tim Cook and Micron Technology (MU) – Get Free Report boss Sanjay Mehrotra.
The ramp-up of chipmaking capability within the U.S., which has ceded market leadership to southeast Asia over the past 20 years, can even form a key plank in Apple’s technique to wean itself from reliance on supply chains that stem from facilities in China.
Bloomberg reported Wednesday that Apple will start upgrading OLED screen on higher-end Apple Watches by the tip of next yr, using its own design, because it transitions from providers comparable to Samsung and LG Display Co.
Earlier this week, similar reports suggested Apple is planning to dump the products made by chipmaker Broadcom (AVGO) – Get Free Report and replace them with in-house designed chips inside the following two years.
Apple will publish its December quarter earnings on January 26, with early estimates indicating a bottom line of $1.98 per share on revenues of $122.7 billion.