At each quarterly earnings call, the Taiwan Semiconductor Manufacturing Company (TSMC), apart from informing eager anticipants the resulting financial turnouts of the previous quarter, provides earnings guidance for the quarter under way. Given that the projected figures disclosed therein are divulged traditionally on the 15th day of the commencing quarter's 1st month, namely, at a time when the commercial and financial realities of the company are still in flux, forecasts drawn thenceforth may likely be open for scrutiny. It is thus the objective of this article, on the basis of official financial performance statistics gathered from both TSMC and the Intel Corporation (Intel) concerning the previous eight financial quarters, from 2021 Q1 to 2022 Q4, to appraise their credibility and veracity.
TSMC's actual and forecast financial figures for 2021
By perusing the data set out under Table 1, one can tell that net operating revenues flowing from both 2021 Q1 and Q3 fall under the predicted yields. Whereas the performance for both Q2 and Q4 exceeded their expectations. In relation to the gross margins, TSMC did not disappoint by meeting its previous estimations. The net margins for both 2021 Q1 and Q2 passed muster, with excelling outcomes for both Q3 and Q4.
In summation, in TSMC's 2021 commercial performance, 8 out of the 12 actual figures, fell within predictions. Additionally, 4 of these even eclipsed their expectant digits. Henceforth, drawing from these data sets, it can be concluded that the guidance provided is fully reliable.
Intel's actual and forecast figures for 2021
Looking into Intel's financial statement, one can observe Intel to have outdone its expected net operating revenue ambitions. Moreover, apart from Q1, forecast data of which have yet being published, its gross margin for both Q2, Q3 and Q4 were noticeably superior to their expectant projections. As to its operating margins, Intel has so far only supplied to the public forecasts of one single quarter, and its actual yield falls truly far short of its forecast (as shown in red).
Out of the Intel's 2021 forecast and actual figures, 7 out of 8 of these came out as a surprise (as shown in blue). Furthermore, one of these turn out to be an outright jolting fright. In another words, Intel's financial performance guidance projections were not at all reliable. During 2021 Q1, its actual net margin numbers fell far behind their forecasts.
Reasons for the discouraging denouement can be attributed to restructuring expenses totalling US$2.209 billion, following lay-offs ensuing from the recent production chain adjustments, as well as disbursement of substantial legal expenses proceeding from a Very-Large-Scale-Integration (VLSI)-related lawsuit. The unorthodox inclusion of the aforementioned costs in the financial calculations may allude to the application of a hefty 'big bath charge'. Presumably, the newly incumbent Chief Execution Officer (CEO) Pat Gelsinger, would want these costs, and all their corollary implications, be shifted towards his predecessor and be done away with.
TSMC's actual and forecast financial figures for 2022
In 2022, as referenced under Table 3, TSMC's net operating revenue exceeded its forecasts, whereas the outcomes for the other three quarters were satisfactory as envisioned. All of the resulting numbers for both gross and net margins exceeded their forecast targets.
Thus, 9 out of the 12 actual figures came out as a surprise (as shown in blue). 3 of these fell within their estimated expectations. It can therefore be rightly asserted that 2022 has been an unquestionably bountiful year for TSMC.
Intel's actual and forecast figures for 2022
Intel's 2022 Q1 actual figures exceeded their forecast digits, with Q3 and Q4 performing as expected within their forecasted positions. However, the results from 2022 Q2 were unsatisfactory, having failed to attain their projected numbers. In terms of gross margins, Intel's 2022 Q1 surpassed their guidance predictions. Nonetheless, actual execution for Q2, Q3 and Q4 did not meet their forecast objectives.
2 of the 8 Intel figures for 2022 (as shown in blue) turn out be surprising, yet 4 of these were despondently inadequate, having not achieved their forecasts (as shown in red). Intel's financial guidance numbers can thus be said to not only be inaccurate but also disappointing, as their consecutive failures to surpass the tri-quarterly bottleneck defeats emerging from Q2 to Q4 can bear witness. In fine, a dispiriting year for Intel investors.
TSMC's actual and projected quarterly financial figures, 1Q21-4Q21 (US$b) | ||||||||
1Q21 forecast | 1Q21 actual | 2Q21 forecast | 2Q21 actual | 3Q21 forecast | 3Q21 actual | 4Q21 forecast | 4Q21 actual | |
Net operating revenue | 12.7-13.0 | 12.92 | 12.9-13.2 | 13.29 | 14.6-14.9 | 14.88 | 15.4-15.7 | 15.74 |
Gross margin | 50.5%-52.5% | 52.4% | 49.5%-51.5% | 50.0% | 49.5%-51.5% | 51.3% | 51%-53% | 52.7% |
Operating margin | 39.5%-41.5% | 41.5% | 38.5%-40.5% | 39.1% | 38.5%-40.5% | 41.2% | 39%-41% | 41.7% |
Source: TSMC, compiled by Prof. Kuo-Hua Chou, March 2023
Intel's actual and projected quarterly financial figures, 1Q21-4Q21 (US$b) | ||||||||
1Q21 forecast | 1Q21 actual | 2Q21 forecast | 2Q21 actual | 3Q21 forecast | 3Q21 actual | 4Q21 forecast | 4Q21 actual | |
Net operating revenue | 18.6 | 19.7 | 18.9 | 19.6 | 19.1 | 19.2 | 19.2 | 20.5 |
Gross margin | 55.2% | 55% | 57.1% | 53% | 56.0% | 51.4% | 53.6% | |
Operating margin | 27% | 18.8% | 28.3% | 27.2% | 24.3% | |||
Source: Intel, compiled by Prof. Kuo-Hua Chou, March 2023
*Note: The financial data provided by Intel can be divided under the Generally Accepted Accounting Principles (GAAP) and non-GAAP formats. For the purpose of narrating the present thesis, GAAP figures are employed.
*Note: Intel has yet to provide operating margin forecasts from 2021 Q2 onwards.
TSMC's actual and projected quarterly financial figures, 1Q22-4Q22 (US$b) | ||||||||
1Q22 forecast | 1Q22 actual | 2Q22 forecast | 2Q22 actual | 3Q22 forecast | 3Q22 actual | 4Q22 forecast | 4Q22 actual | |
Net operating revenue | 16.6-17.2 | 17.57 | 17.6-18.2 | 18.16 | 19.8-20.6 | 20.23 | 19.9-20.7 | 19.93 |
Gross margin | 53%-55% | 55.6% | 56%-58% | 59.1% | 57.5%-59.5% | 60.4% | 59.5%-61.5% | 62.2% |
Operating margin | 42%-44% | 45.6% | 45%-47% | 49.1% | 47%-49% | 50.6% | 49%-51% | 52% |
Source: TSMC, compiled by Prof. Kuo-Hua Chou, March 2023
Intel's actual and projected quarterly financial figures, 1Q22-4Q22 (US$b) | ||||||||
1Q22 forecast | 1Q22 actual | 2Q22 forecast | 2Q22 actual | 3Q22 forecast | 3Q22 actual | 4Q22 forecast | 4Q22 actual | |
Net operating revenue | 18.3 | 18.4 | 18 | 15.3 | 15-16 | 15.3 | 14-15 | 14.0 |
Gross margin | 49% | 50.4% | 48% | 36.5% | 43.2% | 42.6% | 41.4% | 39.2% |
Operating margin | 23.7% | (4.6%) | (1.1%) | (8.1%) | ||||
Source: Intel, compiled by Prof. Kuo-Hua Chou, March 2023
*Note: The financial data provided by Intel can be divided under the Generally Accepted Accounting Principles (GAAP) and non-GAAP formats. For the purpose of narrating the present thesis, GAAP figures are employed.
*Note: Intel has yet to provide operating margin forecasts from 2021 Q2 onwards.
(Editor's note: Passionate in teaching and sharing, Kuo-Hua Chou currently serves as an Associate Professor in Taiwan's National Pingtung University, teaching accounting. He has been dedicated to constructing sites teaching accounting, XBRL and semiconductor industry analysys. The majority of his teaching material and written work are open to public access: http://www.ais.nptu.edu.tw)
