TSMC, formally Taiwan Semiconductor Manufacturing Co Ltd, posted a net profit of $1.99 billion for January-March, 31.6 percent less than a year earlier, and the steepest fall since the third quarter of 2011.
The result also lagged behind what the cocaine nose jobs of Wall Street expected.
The company, a proxy for global technology demand as its clients, include iPhone maker Apple, Qualcomm and Huawei forecast second-quarter revenue of $2.44810 billion – 2.5 percent lower than the year earlier.
It forecast gross margin for the second quarter of 43 percent to 45 percent, while operating margin will be 31 percent to 33 percent, compared with 47.8 percent and 36.2 percent a year earlier.
Slowing global demand for smartphones, as well as concerns over the prolonged US-China trade war, has taken a toll on Taiwan’s supply chain manufacturers.
Analysts said TSMC would gradually recover from sluggish smartphone sales in coming months and new demand including for devices equipped with fifth-generation (5G) communications technology could help keep full-year revenue at least broadly flat.
Mark Li, an analyst at Sanford C. Bernstein, wrote in a research note before the earnings announcement that 5G should put TSMC back to growth and help it deliver double-digit earnings per share expansion in 2020 and 2021.
Analysts said TSMC could also benefit from Chinese clients stocking up on semiconductor products in case of any adverse outcome from the US-China trade negotiations.
Revenue in US dollar terms fell 16.1 percent to $7.1 billion in the first quarter, versus the company’s previously estimated range of $7.0 billion to $7.1 billion, and compared with the $7.15 billion average of 22 analyst estimates.