Taiwan Semiconductor (TSM 35.69, 0.00) is little changed after missing earnings expectations and issuing below-consensus guidance.
The semiconductor manufacturing giant reported below-consensus second quarter earnings of TWD2.56 per share on a 3.6% year-over-year decline in revenue to TWD213.86 billion, which was just shy of market expectations.
Taiwan Semiconductor's earnings miss comes just days after the company warned about an impending shortfall. On Monday, the company reported that its June revenue grew 3.4% year-over-year to TWD84.20 billion and that second quarter revenue is expected to total TWD213.86 billion, which was confirmed today.
Monday's cautious update did not prevent the stock from moving higher, likely due to the understanding that the second quarter represents a traditionally weak period for chipmakers. Since the announcement, the stock has climbed 3.0%.
Returning to the second quarter earnings report, gross margin declined to 50.8% from 51.5% while operating margin dipped to 38.9% from last year's 41.2%. Net profit margin dipped to 31.0% from 32.7%.
The company began shipping 10-nanometer wafers during the quarter and those shipments accounted for 1.0% of total wafer revenue. Shipments of 16/20-nanometer process technology represented 26.0% of total wafer revenue, up from 23.0% one year ago. Shipments of 28-nanometer and more advanced technologies represented 54.0% of total wafer revenue, up from 51.0% one year ago.
In addition to missing second quarter expectations, the company issued cautious guidance for the third quarter, expecting revenue between TWD8.12 billion and TWD8.22 billion. Gross profit margin is expected between 48.5% and 50.5% while operating profit margin is expected between 37.0% and 39.0%.