Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, on Thursday beat Wall Street's targets for the third quarter and guided higher for the current period. The news comes amid warnings from other chipmakers of weakening demand. TSM stock rose after the report.
Taiwan Semi, better known as TSMC, earned $1.79 per U.S. share on sales of $20.23 billion in the September quarter. Meanwhile, analysts polled by FactSet expected TSMC earnings of $1.65 a share on sales of $19.44 billion. On a year-over-year basis, TSMC earnings jumped 67% while sales advanced 36%.
For the current quarter, TSMC forecast sales of $19.9 billion to $20.7 billion. The midpoint of $20.3 billion tops analysts' consensus estimate for $19.84 billion. In the year-ago period, it generated sales of $15.85 billion. Its guidance implies fourth-quarter sales growth of 28%.
Taiwan Semiconductor produces chips for fabless semiconductor firms such as AMD, Apple, Nvidia, Qualcomm and others.
TSM Stock Rises On Quarterly Report
On the stock market today, TSM stock climbed 3.9% to close at 66.62.
"Our third-quarter business was supported by strong demand for our industry-leading 5-nanometer technologies," Chief Financial Officer Wendell Huang said in a news release.
He added, "Moving into fourth quarter 2022, we expect our business to be flattish, as the end-market demand weakens, and customers' ongoing inventory adjustment is balanced by continued ramp-up for our industry-leading 5-nanometer technologies."
Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.
In the third quarter, shipments of 5-nanometer chips accounted for 28% of TSMC's total wafer revenue while 7-nanometer chips accounted for 26%. TSMC defines 7-nanometer and smaller nodes as advanced technologies.
TSMC Called 'Last Man Standing'
In recent weeks, AMD, Nvidia and other chipmakers have lowered their sales and earnings targets.
"TSMC's strong Q3 2022 results could earn it the 'last man standing' moniker given the current sector backdrop," Josep Bori, thematic research director at GlobalData, said in a note to clients. "From the Intel and Nvidia profit warnings to more recent negative outlooks from Samsung, AMD, Kioxia, and Micron, it is clear that semiconductor demand is losing momentum. Yet, TSMC managed to deliver growth and provide an outlook above market expectations."
TSM stock ranks No. 15 out of 33 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. Further, it has a mediocre IBD Composite Rating of 62 out of 99.
But Wedbush Securities analyst Matt Bryson reiterated his outperform, or buy, rating on TSM stock.
"While TSMC is clearly not immune to macro effects, we continue to see the company as better positioned to work through any issues in light of continued share gains tied in large part to the company's leadership on advanced nodes," Bryson said in his note to clients.
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