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TSMC Reports Record Profit, Gains Exemption From U.S. Chip Curbs on China

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Taiwan Semiconductor Manufacturing Co. said that its third-quarter net profit rose 80% to a new record, and that it had been granted a one-year exemption from new U.S. restrictions on China’s chip sector, allowing it to keep expanding its facilities in the country.

The world’s largest contract chip maker’s strong performance in the quarter was due to strong sales of its cutting-edge chips used in smartphones and other devices, as well as higher margins.

Facing headwinds from slowing global chips demand to the U.S. curbs on China’s sector that are roiling the whole industry,

TSMC


TSM 1.04%

cut its capital expenditure budget forecast to $36 billion for 2022, compared to the goal of $40 billion to $44 billion set earlier this year.

TSMC’s shares had dropped significantly this week to their lowest closing in more than two years, as investors showed concern about the broad ramifications on the sector from the new U.S. restrictions.

Last Friday, the U.S. unveiled strict export control regulations to restrict China’s ability to manufacture and develop advanced semiconductors.

TSMC joined other non-U.S. chip makers, which include South Korea’s

Samsung Electronics Co.

and

SK Hynix Inc.,

in getting the exemption from U.S. rules, the company said Thursday.

TSMC said net profit for the quarter ended Sept. 30 rose to 280.87 billion new Taiwan dollars, equivalent to $8.83 billion, from NT$156.26 billion a year earlier. That beat the estimate of NT$267.31 billion taken from a poll of analysts by S&P Global Market Intelligence.

Third-quarter revenue increased 48% from a year earlier to NT$613.14 billion.

The company’s operating profit margin improved by 9.4 percentage points from a year earlier to 50.6%.

Revenue from smartphones rose 25% from the previous quarter, while revenue from high-performance computing increased 4%.

TSMC said revenue from customers in North America made up 72% of the third-quarter total, up from 64% in the second quarter, while revenue from China accounted for 8%, down from 13% in the previous quarter.

Write to Yang Jie at [email protected] and Kosaku Narioka at [email protected]

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