TSMC Q3 net profit hits new high; gross margin recovers

10/14/2021 04:08 PM
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CNA file photo
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Taipei, Oct. 14 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reported record-high third-quarter net profits Thursday, with its gross margin reversing a sequential decline seen in the second quarter of 2021.

In a statement, TSMC said it posted NT$156.26 billion (US$5.58 billion) for the July-October period, up 16.3 percent from a quarter earlier and also up 13.8 percent from a year earlier, with market analysts attributing the growth to product price hikes.

Its earnings per share for the third quarter also reached a new high of NT$6.03, compared with NT$5.18 the previous quarter and NT$5.30 a year earlier.

Its third-quarter gross margin -- the difference between revenue and cost of goods sold -- rose 1.3 percentage points from a quarter earlier to 51.3 percent. This placed it at the higher end of the chipmaker's estimated range of 49.5-51.5 percent.

"The growth in gross margin largely reflected TSMC's move to raise its product prices (in August) and the increase eased market concerns over a possible continued fall in its profit margin due to large depreciation costs in its advanced processes," Mega International Investment Services Corp. analyst Alex Huang said.

Other market analysts said the higher gross margin also resulted from an improving bottom line in the chipmaker's integrated circuit packaging and testing operations, as well as its improved technology portfolio.

The uptick in gross margin for the third quarter reversed a 2.4 percentage point sequential decline in the second quarter.

In the third quarter, TSMC's consolidated sales stood at US$14.88 billion, which was also at the higher end of its estimated range of US$14.6 billion-US$14.9 billion.

In Taiwan dollar terms, the revenue stood at a new record high of NT$414.67 billion, up 11.4 percent from a quarter earlier and also up 16.3 percent from a year earlier.

During the July-October period, sales in TSMC's chips for internet connectivity use rose 23 percent from a quarter earlier, the highest growth among the chipmaker's divisions, followed by its smartphone chip division (15 percent), the high performance computing division (9 percent) and the automotive electronics division (5 percent).

Bucking this trend, revenue generated by its consumer electronics gadget division fell about 2 percent from a quarter earlier.

In the third quarter, TSMC's advanced 5 nanometer process, the last technology put into mass production by the chipmaker, accounted for 18 percent of its total sales, while its 7nm process made up 34 percent.

In the first nine months of this year, TSMC's net profit stood at NT$430.31 billion, up 14.7 percent from a year earlier, with EPS at NT$16.59.

Its gross margin for the nine-month period stood at 51.2 percent, down 1.6 percentage points from a year earlier.

(By Chang Chien-chung and Frances Huang)

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