(Yicai Global) Jan. 13 -- Taiwan Semiconductor Manufacturing Company forecasts revenue to rebound after an expected decline in the first half of 2023, the chief executive officer of the world’s largest chip foundry said, predicting a “slight growth year” amid weaker demand.

“In the first half of 2023, we expect our revenue to decline mid to high single-digit percent over the same period last year in US dollar terms,” CEO CC Wei said during TSMC’s earnings call yesterday after the Hsinchu-based chip firm posted a 27 percent gain in the fourth quarter.

“We forecast the semiconductor cycle to bottom sometime in the first half and to see a healthy recovery in the second half,” when revenue in US dollar terms will likely increase, he said. “We expect 2023 to be a slight growth year for TSMC.”

The semiconductor market, excluding memory chips, will contract about 4 percent in 2023, while the foundry industry is expected to shrink 3 percent, Wei pointed out.

TSMC’s research and development expenses will probably rise 20 percent this year, accounting for between 8 percent and 8.5 percent of total revenue, versus 7.2 percent last year, Vice President Wendell Wendell Huang said.

Shares of TSMC [TPE: 2330] gained 2.8 percent today to close at TWD500 (USD16.51) each.

“Moving into the first quarter, as overall macroeconomic conditions remain weak, we expect our business to be further impacted by continued end-market demand softness and customers’ inventory adjustment,” said Huang, who is also the firm’s chief financial officer.

First-quarter revenue is expected to decrease 12.2 percent to 16.2 percent to between USD16.7 billion USD17.5 billion, compared with USD17.57 billion a year earlier, with a gross profit margin of between 53.5 percent and 55.5 percent and an operating profit margin of 41.5 percent to 43.5 percent, TSMC said.

In the last quarter of 2022, revenue rose 27 percent to USD19.9 billion from a year earlier, but fell 1.5 percent over the third quarter, driven by sales of seven-nanometer and more advanced wafer technologies.

Gross margin was 62.2 percent in the three months ended Dec. 31, while operating margin was 52 percent, and net profit margin was 47.3 percent.

“Our fourth-quarter business was dampened by end-market demand softness, and customers’ inventory adjustment, despite the continued ramp-up for our industry-leading 5nm technologies,”  Huang said.

Full-year profit jumped 70 percent to USD36 billion on a 43 percent increase in revenue to USD73 billion.

TSMC’s plant in Arizona, in the US, will mass produce 4-nm wafers next year and three-nanometer wafers in 2026, Wei noted, adding that the firm is considering building a second overseas plant in Japan.

Editor: Futura Costaglione