The world’s largest custom chip maker, TSMC, from Taiwan, saw a profit jump in the third quarter thanks to strong demand from data centers and electric vehicle manufacturers. Despite this, the Apple and Qualcomm supplier cut its investment budget by at least 10 percent to about 36 billion dollars (37 billion euros) due to inflation and the uncertain global economy, the group announced.
Just three months ago, TSMC said the current downturn in the industry has little impact and demand for its chips is stable in the long term. Net profit rose 80 percent to USD 280.9 billion in the July-September period, surpassing analyst estimates of USD 265.6 billion, TSMC said Thursday. Sales rose 36 percent to $20.23 billion. For the fourth quarter, the chipmaker predicted a 29 percent increase in revenue to $19.9 billion to $20.7 billion, compared to $15.74 billion a year earlier.
When asked about his possible expansion plans in Europe, TSMC boss CC Wei said nothing had been decided yet. “We will continue to expand our overseas manufacturing base based on customer needs, business opportunities and also operational efficiency and economy,” he said. “We are currently investigating whether we will enter Europe and are not ruling out any possibilities.”
Billions in EU subsidies
The “European Chips Act”, which was launched in February, allows billions in grants from public and private sources in the European Union. Intel then decided to build a chip area in Magdeburg for 17 billion euros and also invest in France, Italy, Poland, Spain and Ireland. According to insiders, there would have been talks between TSMC and Dresden about the construction of a factory in the Saxon capital.
In addition to the weakening economy in many countries, the semiconductor industry is concerned about the tense relationship between China and the US. The United States, for example, wants to further restrict the activities of chip manufacturers with stricter conditions because they fear a technology transfer to China. On the one hand, this infuriated the Chinese government and on the other, it could exacerbate global supply chain problems, some of which are due to a lack of semiconductor products. The situation here had eased somewhat lately.
Pandemic caused chip shortage
Due to the high demand for electronic devices, chips were very scarce during the pandemic. In a number of industries – from solar energy to the automotive industry to consumer electronics – they were the bottleneck that limited further production. But many chip manufacturers have since built new factories that extend the range. In addition, consumers are cutting back on their spending to hold onto cash in times of inflation.
On the stock exchanges, prices for chip manufacturers have been going downhill for a long time. Since January, TSMC’s market cap has fallen from more than half a trillion dollars to about $332 billion. But other companies have had it worse. Nvidia’s market cap shrank from nearly $900 billion in November 2021 to just $286 billion most recently. Infineon’s share price has fallen more than 40 percent since the turn of the year.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
