Taiwan Semiconductor (TSM 40.62, -0.88) is lower by 2.1% despite beating quarterly expectations. Today's early decline has trimmed the stock's 2017 gain to 41.7%.
The world's largest semiconductor foundry reported above-consensus third quarter earnings of NT3.47 per share on a 3.2% year-over-year decrease to NT252.11 billion, which also exceeded expectations. Revenue expressed in U.S. dollars increased 1.5% year-over-year to $8.32 billion.
Gross margin declined to 49.9% from 50.7% one year ago while operating margin fell to 38.9% from 40.8% in 2016. Gross margin was near the top end of the company's guidance for margin between 48.5% and 50.5%.
Shipments of 10-nanometer architecture made up 10.0% of total wafer revenue while 16/20-nanometer process technology accounted for 24.0% of total wafer revenue. Advanced technologies (28-nanometer and more advanced) revenue made up 57.0% of total wafer revenue.
Launches of major mobile products like the iPhone 8 drove the company's third quarter revenue while healthy demand for video cards from NVIDIA (NVDA 195.01, -2.57) also contributed to quarterly revenue. Taiwan Semiconductor manufactures chips for NVIDIA. The company noted that third quarter revenue was weakened by inventory management efforts among its consumers.
Glancing at revenue by application, Communication revenue made up 56.0% of total sales, Industrial/Standard revenue made up 25.0% of sales, while Computer and Consumer revenue made up 10.0% and 9.0% of sales, respectively.
Looking ahead, Taiwan Semiconductor expects that revenue for the fourth quarter will be between $9.10 billion and $9.20 billion, a range which encompasses current market estimates.