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TSMC sees 24.9% drop in Q3 profit as chip demand slows

Taiwanese chipmaker TSMC posted a smaller-than-expected 25% fall in third-quarter net profit on Thursday, raising hopes that a year-long slowdown in the global semiconductor industry is poised for a slow recovery.

The forecast-beating results by the world’s most advanced chipmaker follows better-than-expected quarterly profit from rival Samsung Electronics (005930.KS) earlier this month.

But investors are looking for comments from TSMC executives later in the day to better gauge the strength of any recovery, as its key supplier ASML warned of flat 2024 sales on Wednesday, citing caution by chipmakers in new investment.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) , the world’s largest contract chipmaker and a major Apple Inc (AAPL.O) supplier, saw July-September net profit fall to T$211 billion from T$280.9 billion a year earlier.

The profit beat a T$195.5 billion LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.

TSMC, Asia’s most valuable listed company, said third-quarter revenue dropped 14.6% to $17.3 billion, in line with the company’s previous forecast of $16.7 billion to $17.5 billion.

Revenue from the high performance computing segment, which includes high-end chips such as artificial intelligence (AI) semiconductors and 5G applications, accounted for 42% of its total sales, down from 44% in the previous quarter but up from 39% a year earlier.

Capital expenditure in the third quarter was $7.1 billion, TSMC said, compared with $8.17 billion in the previous quarter.

As the biggest maker of advanced chips, TSMC must navigate an uncertain industry outlook and a U.S.-China chip spat that could make it vulnerable.

TSMC’s Taipei-listed shares fell 27.1% in 2022, but are up around 22% so far this year, giving the chipmaker a market value of $432.3 billion. The stock rose 1.1% on Thursday versus a flat benchmark index.

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