Taiwan Semiconductor Manufacturing Company (TSMC) predicted a rebound in sales in the current quarter, following declines in Q2 and Q3, with the company seeing early signs of demand stabilisation in the smartphone and PC market.

In an earnings call, CEO C.C. Wei said it expects business in the current quarter to be supported by the expansion of 3nm process production, partially offset by customers’ continued inventory adjustment.

He noted its Q4 revenue guidance is higher than previously forecast because demand for 3nm products is strong. “We ramped up quickly to meet customers’ demand.”

Looking ahead to 2024, the CEO said while it’s “very close” to the bottom it’s too early to call it a sharp rebound.

Wei added the impact of new US restrictions on the sale of AI chips to China is limited and manageable, at least for the short term.

CFO Wendell Huang pegged Q4 revenue at between $18.8 billion and $19.6 billion, with the midpoint representing 11.1 per cent sequential growth.

Net profit in Q3 slid 24.9 per cent year-on-year to TWD211 billion ($6.5 billion).

Two weeks ago, the company reported Q3 revenue declined 10.8 per cent to TWD546.7 billion.

High performance computing (HPC) sales increased 6 per cent to account for 42 per cent of total revenue. Smartphone revenue grew 33 per cent, accounting for 39 per cent of the total, and IoT sales were up 24 per cent to account for 9 per cent. Automotive chips decreased 24 per cent to account for 5 per cent. 

Shipments of 3nm chips accounted for 6 per cent of total wafer revenue, 5nm 37 per cent, 7nm 16 per cent and product larger than 7nm 59 per cent.

Capex for the full year is expected to reach $32 billion, down from $36.3 billion in 2022.

The contract chipmaker is a major supplier of processors to Apple, Arm, Nvidia and others.