Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker and a supplier to Apple and Nvidia, is expected to report a 27% decline in second quarter profit on Thursday. This drop reflects slowing demand for semiconductors as economic challenges mount globally.
Analysts forecast TSMC will report a profit of T$172.53 billion ($5.58 billion) for the April to June period, down from T$237 billion a year earlier. The decline partly reflects strong results a year ago during the post-pandemic demand boom.
However, analysts say that TSMC's performance is likely to improve in the third quarter. While second quarter may mark the bottom of the current downcycle, inventory adjustments are ongoing and the recovery will be more gradual.
One fund manager said that demand for artificial intelligence applications is driving orders and that third quarter profits will likely rebound due to upcoming iPhone launches and overall AI demand. Taiwan's tech supply chain is well positioned to benefit from AI growth.
In the previous quarter ending March, TSMC posted a surprise 2% profit rise, though at the smallest quarterly growth since mid-2019. The company said rapidly rising orders for AI applications are supporting demand and performance is expected to be better in the second half than the first.
TSMC's Taipei-listed shares are up almost 30% year-to-date, outperforming the broader market, reflecting the bright outlook for AI applications. The company will provide a third quarter outlook and updates to previous forecasts during its earnings call on Thursday.
