The chip industry may be out of the darkest hour! TSMC's Q4 revenue flat year-on-year, net profit beats estimates

TSMC reported a smaller-than-expected drop in net profit, another sign that the chip industry's slump may have bottomed out. The data show that TSMC's fourth-quarter 2023 revenue was NT$625.5 billion, essentially flat year-on-year; net profit was NT$238.7 billion ($7.6 billion), down 19.3% year-on-year, but better than the market's expectations of NT$224.1 billion; and diluted EPS was NT$9.21, compared with NT$11.41 in the same period a year earlier.

Frantic demand for Nvidia's artificial intelligence chips boosted TSMC in 2023, offsetting the impact of sluggish global smartphone demand.

Bloomberg Intelligence analyst Charles Shum said: "TSMC could lead global chip foundries through the industry headwinds of 2023-24 due to growing demand for AI chips and migration to next-generation process nodes. While the smartphone and PC chip markets remain stagnant, TSMC's advanced packaging technology has solidified its position in the foundry chip manufacturing market, giving it the potential to return to a 53% gross margin after a brief second-half slump."

The chip manufacturing industry has shown signs of recovery in recent weeks. The Semiconductor Industry Association (SIA) estimates that chip sales grew last November after more than a year of decline.

For TSMC, a strong consumer economy will help stabilize sales. TSMC's biggest customers include Qualcomm and Apple. TSMC executives said they expect "healthy growth" this year. $Taiwan Semiconductor (TSM.US)$ $Direxion Daily Semiconductor Bull 3x Shares ETF (SOXL.US)$