On January 10th local time, TSMC released its December 2023 revenue report. The report shows that although TSMC's annual revenue declined year-on-year, its revenue performance in the fourth quarter was better than market expectations, indicating that the demand for AI chips offset the weak demand for storage chips.
The report shows that,
TSMC's sales in December were NT $176.3 billion (approximately RMB 40.620 billion), a decrease of 14.4% month on month and 8.4% year-on-year.
In 2023, TSMC's sales revenue reached NT $2161.74 billion (approximately RMB 498.065 billion), a year-on-year decrease of 4.5%.
Despite a decline in revenue throughout the year, TSMC's revenue performance in the fourth quarter of last year reached NT $625.5 billion (approximately RMB 144.1 billion), which is basically at the same level as the same period in 2022- and this is almost TSMC's record high revenue.
TSMC's quarterly revenue performance
TSMC's revenue performance in the fourth quarter was better than market expectations of NT $616.2 billion (approximately RMB 142 billion), and also better than its early financial report guidance of US $18.8-19.6 billion (approximately RMB 134.8-140.5 billion).
This indicates that the increase in demand for AI chips last year offset the weak demand for consumer electronics chips such as smartphones and computers.
TSMC will hold a Q4 2023 financial report meeting and conference call on January 18th, during which more detailed information will be released.
Chip demand is expected to recover this year
During 2023, due to the efforts of the consumer electronics industry to cope with excess chip inventory, TSMC slowed down its capital expenditure plan.
Recently, TSMC's most important customer, Apple, has also encountered a headwind: several Wall Street analysts downgraded Apple's rating earlier this year due to expectations of weak demand for the latest generation iPhone.
Earlier this week, Samsung Electronics, also a chip manufacturing giant, released lower than expected financial reports, showing that Samsung has experienced a sixth consecutive quarter of declining operating profits due to sluggish demand for smartphones and storage chips.
However, TSMC still expects that chip demand has bottomed out last summer and is expected to recover in the early months of 2024.
TSMC previously stated that benefiting from the global semiconductor recovery, the end of terminal destocking, and the continuous explosion of AI applications, TSMC's performance is expected to return to growth this year, with the opportunity to challenge revenue of NT $2.5 trillion, a year-on-year increase of over 15%.
The latest report from the Semiconductor Industry Association (SIA) also shows that global chip sales finally saw their first growth in over a year in November last year, indicating that the momentum of chip demand recovery in 2024 is accumulating.
Artificial intelligence brings growth momentum
Under the wave of artificial intelligence, TSMC is undoubtedly one of the biggest beneficiaries.
TSMC CEO Wei Zhejia and other executives have previously stated that even in a global economic downturn, companies are eager to build their own artificial intelligence tools.
They expect TSMC's overall business to grow this year, and the company's high-performance computing business will be boosted by demand for artificial intelligence chips from companies such as Nvidia and AMD.
HSBC analysts Ricky Seo and Hankil Chang suggest that upgrading AI servers and upgrading AI applications on devices may drive the IT update cycle. "For US cloud service providers, we expect capital expenditures to increase significantly, with a growth of approximately 65% by 2024. In addition, in 2024, the purchase of artificial intelligence servers may account for 57% of the total investment, far higher than the 8% in 2022."