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The Taiwan Semiconductor Manufacturing Company (TSMC) released its revenue figures for May earlier today. These indicate that while the firm has yet to retake previous revenue highs witnessed last year during a peak of the semiconductor cycle, it nevertheless appears to be recovering from a slump that started over the past few months. This came after orders from chip designers slowed down and purchasing power in the broader personal and enterprise computing dropped in a weak macroeconomic environment.
TSMC's May Revenue Grows 19.4% Sequentially, Doubling Last Year's Growth
TSMC's data shows that it brought in NT$176 billion in revenue during May 2023, marking a strong 19% growth over the previous month when it had raked in NT$147.9 billion. April had seen revenue stay relatively flat over March, which was quite a development by seasonal standards. This is because from 2016 until 2022, TSMC's revenue always fell between the two months, and April 2022 was the first time in years that revenue during the first month of the second quarter picked up sequentially.
Speaking of history, the 19% growth in May revenues is the strongest revenue growth for the month since 2017. May revenues had sequentially grown by 8% last year, and TSMC's average sequential revenue growth in May is 6% starting from 2006. Year to May, the firm's revenue sits at NT$833 billion, marking a 1.9% drop - indicating that the chip sector might not have shrunk significantly over last year despite the macroeconomic headwinds plaguing the high growth technology sector.
Analysts believe that the worst might be over for TSMC as Apple's order growth during the second half of this year will help with the utilization rates of the firm's advanced process technologies. Additionally, TSMC's June revenue might drop by anywhere between 8.5% to 22% in June due to inventory clearance at quarter end.
The bit about Apple's order growth is also mirrored in a report issued by Wedbush after TSMC's latest release. According to Wedbush's analysis, TSMC's performing quite well in this quarter, with the cumulative revenue in April and May representing 68% of the firm's revenue estimates for the Taiwanese chipmaker in Q2 2023.
Wedbush adds that the strong growth during May might also be a result of a growth in demand for artificial intelligence product wafers. Demand from Apple and NVIDIA is expected to materialize primarily in the next quarter, creating an opportunity for a strong performance by TSMC.
Rumors have suggested that TSMC is ramping up production in some of its factories, and the firm's shares soared late last month after chip designer NVIDIA Corporation's blockbuster earnings report that saw it outline a trillion dollar market for enterprise artificial intelligence spending. Reports from investment banks such as Morgan Stanley - released prior to NVIDIA's game changing report - have speculated that its revenue would slump in the first half and drop by as much as 9%.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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