TSMC Q4 net profit hits record high as gross margin improves

Taipei, Jan. 13 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) posted a new record net profit in the fourth quarter of 2021, up more than 6 percent from the previous quarter as its gross margin continued to improve.

In a statement released on Thursday ahead of an investor conference, TSMC, the world's largest contract chipmaker, said it earned a fourth-quarter net profit of NT$166.23 billion (US$6.0 billion), up 6.4 percent from the third quarter and up 16.4 percent from the same period one year earlier.

The chipmaker's earnings per share (EPS) for the fourth quarter hit NT$6.41, up from NT$6.03 a quarter earlier and also up NT$5.51 from a year earlier.

Its gross margin -- the difference between revenue and cost of goods sold -- rose 52.7 percent in the October-December period, up 1.4 percentage points from the third quarter's gross margin, which had also grown 1.3 percentage points from the second quarter.

"The fourth-quarter earnings were in line with market expectations as the market had embraced high hopes that TSMC would benefit from an increase in product prices at a time of a global chip supply shortage to boost its gross margin and bottom line," Mega International Investment Services Corp. analyst Alex Huang said.

"Strong demand for its high-end processes and mature technologies allowed TSMC to assuage the impact resulting from a traditional slow season in the fourth quarter," Huang said.

"Now, we are waiting on how TSMC will give guidance for the first quarter," Huang said, adding that his brokerage expects the chipmaker to see its net profit rise about 2.6 percent in the first quarter of this year from the previous quarter.

In the fourth quarter, TSMC generated US$15.74 billion in consolidated sales, beating the company's previous estimate ranging between US$15.4 billion and US$15.7 billion.

In Taiwan dollar terms, TSMC's consolidated sales rose 5.7 percent from a quarter earlier to a new high of NT$438.19 billion in the fourth quarter.

Its operating margin also rose to 41.7 percent in the fourth quarter from 41.2 percent in the third quarter.

According to TSMC, its advanced 5-nanometer process, the latest technology the chipmaker has started mass production, accounted for 23 percent of its total sales in the fourth quarter, while the 7nm process made up 27 percent on the back of robust demand for gadgets such as smartphones, high-performance computing devices, the Internet of Things, and automotive electronics.

For the entire 2021, TSMC posted NT$596.54 billion in net profit, smashing its past records, up 15.2 percent from a year earlier with EPS at NT$23.01, compared with NT$19.97 a year earlier.

Its gross margin for 2021, however, fell by 1.5 percentage points from a year earlier to 51.6 percent.