TSMC earnings hit by weakening PC, smartphone demand

Shares of Taiwan Semiconductor Manufacturing Company fell after the chipmaker reported its first profit decline in four years. Yahoo Finance Tech Editor Dan Howley explains how a slowdown in consumer device sales are impacting the company.

Video Transcript

ALEXANDRA CANAL: Shares of Taiwan Semiconductor falling today on the heels of the company's second quarter earnings. The chip giant reporting its first profit decline in four years. Yahoo Finance's Dan Howley joins us now for more. Dan.

DAN HOWLEY: That's right. We're looking at TSMC. And essentially, what's going on here is a shortfall as far as the smartphone side of things. You know, we've been talking about for a while this kind of slowdown in the consumer market as far as laptops, desktops, and smartphones. And it seems as though companies that use TSMC for that technology are continuing to suffer from a shortfall.

One of the largest customers for TSMC is Apple. So you can try to read into what this means for Apple's iPhone sales in the quarter. Though, obviously, it's a larger company, TSMC. And it doesn't just rely on Apple solely. So, you know, the slowdown may or may not have to do with that. But it's worth keeping in mind as we look to Apple's earnings in the coming weeks.

And so basically, we have the consumer electronics side of things and then the AI side of things. And so there's been this huge ramp up in activity in. Nvidia, obviously, is a client of TSMC. And so, you know, we're talking more and more about how AI is going to be this boom for the semiconductor industry. But-- and it is. At the same time, though it's being dragged down because of the slowdown in the consumer market.

So it's kind of, you know, we're winning on one side and failing on the other. And until the consumer side of the market starts to turn around, you really won't see that massive benefit from the AI boom reflected in the revenue numbers. So I do know that Gartner recently did a survey, filed a report saying that the slowdown in the PC side of things is starting to look like it will turn around, that we're getting towards the end of the declines. Though, we might not see it return to full growth until 2024, around that time frame.

So for TSMC, for other chip makers, it doesn't mean they're quite out of the woods yet.

ALEXANDRA CANAL: Yeah. Certainly, a lot to watch in this sector. Dan Howley, thanks so much.