TSMC meets market forecasts with 0.7 percent fourth-quarter net profit rise

TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co Ltd (TSMC) posted on Thursday a quarterly net profit that met market expectations, amid fears that sluggish demand for smartphones could hurt the world's largest contract chipmaker's bottom line.

The results of TSMC, whose clients include Apple Inc, are being keenly watched after chip suppliers including Samsung Electronics Co Ltd recently flagged weak demand. Tech giant Apple also slashed its sales forecast due to slowing smartphone sales in China.

TSMC, which is also a key supplier for Qualcomm Inc and Huawei Technologies, posted a net profit of T$99.98 billion ($3.24 billion) for the quarter ended December, 0.7 percent higher than a year ago. That is roughly in line with the T$98.94 billion average forecast drawn from 22 analysts, according to Refinitiv data.

Revenue rose 10.7 percent from the previous quarter and 2.0 percent from the same period of the previous year to $9.40 billion. That compared with the company's own estimate of $9.35 billion-$9.45 billion and the average $9.37 billion estimate of 23 analysts polled by Refinitiv.

Analysts said sluggish global smartphone sales, whose chips have powered TSMC for a decade, would partially offset growth from TSMC's leading position in the latest generation of chip-making technology.

"TSMC is another victim of weak iPhone demand and crypto bubble, and the gains through other customers just barely offset that," Mark Li, an analyst at Sanford C. Bernstein, wrote in a note earlier this month.

"Weak iPhone and smartphone is a stiffer headwind and we're turning more cautious on TSMC's outlook this year," he said.

Smartphones would continue to account for 40 percent to 50 percent of TSMC's revenue, the company's chairman Mark Liu told Reuters in an interview last year.

Some, however, remained optimistic on TSMC's dominance on high-performance chips and expected the company to further capture market share in advanced node such as 7nm manufacturing technology - which packs more transistors on smaller and more power-efficient chips.

($1 = 30.8020 Taiwan dollars)

(Reporting By Yimou Lee and Jess Macy Yu; Editing by Muralikumar Anantharaman)