The Taiwan Semiconductor Manufacturing Company (TSMC) has reported its revenue for August and the figure marks a seven month high for the company. This figure comes as the U.S. dollar regains lost strength in the global market and orders for 3 nanometer and artificial intelligence products boomed due to Apple's upcoming product launch cycle and a hype in the industry for AI products. TSMC's revenue during August sat at NT$188 billion to mark a monthly increase that could hint at changing fortunes for the chip sector but an annual drop that comes amidst an industry wide slowdown due to excessive channel inventory and adverse global macroeconomic conditions.
TSMC Grows Revenue By 6% Monthly In August But Annual Figures Still Slump
TSMC's July revenue sat at NT$177 billion, marking the 14% monthly growth after the June revenue had dropped by 11% over May's figures. At the time, the figures were comforting as they indicated that perhaps the downturn in the chi sector has hit the proverbial bottom. Out of the eight months during this year, the company has grown its revenue on a monthly basis in five months, and all of these typically lie during the seasonal time periods, which have also previously delivered growth.
However, the June revenue drop was concerning since the month has typically seen TSMC grow net sales over the previous month, and the equal 11% revenue drop in March follows the same principle. Taking a look at TSMC's revenue for March in previous years, starting from 2013, the firm has always delivered revenue growth apart from 2023 - a fact that indicates the seriousness of the slump in the chip sector. During TSMC's latest earnings call, executives also echoed this slump, with top management warning that the chip sector might struggle for a little longer before its fortune improves.
On annual terms, the situation is less optimistic, to say the least. The August revenue marks a 13% annual drop and marks the sixth consecutive month with negative growth. TSMC's monthly revenue during March and April had dropped by 15% and 14%, respectively, making the latest figures the third sharpest annual revenue drop. At the same time, another crucial factor to consider for August revenues is the Taiwanese dollar.
The Taiwanese currency had appreciated against the dollar until February and since then, it has been on an upward trajectory. The U.S. dollar has picked up upward momentum, particularly since July, due to worries about global economic growth as European, British and Chinese economies continue to slump even as economic data in the U.S. is defying expectations. The dollar index has reversed all losses since the regional banking crisis in March, and since TSMC earns its revenue through exports, a stronger dollar also leads to more sales in the Taiwanese dollar.
Yet, the strong August results put TSMC on track to meet its revenue guidance for the third quarter. Estimates suggest a low end revenue guidance of NT$514 billion for the third quarter, and during July and August, TSMC has brought in NT$366 billion through net sales. In order to meet the low end of the estimate, the fab would have to post NT$147 billion in revenue for September, an achievable figure when we look at historical data. This figure would mark sharp 22% and 29% monthly and annual revenue drops, so the key point to watch out for would be whether the firm beats the estimates of its third quarter revenue guidance.
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