On Thursday, TSMC beat revenue and profit expectations in the Q1 earnings report, mostly thanks to continued strong demand for advanced chips, particularly those used in AI applications. “Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued HPC-related demand,” said Wendell Huang, Senior VP and Chief Financial Officer of TSMC.
She added, “Moving into second quarter 2024, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality”
TSMC Q1 earnings
Here are Taiwan Semiconductor Manufacturing Company’s (TSMC) Q1 financial results or earnings versus LSEG consensus estimates:
TSMC net revenue: 592.64 billion New Taiwan dollars ($18.87 billion), vs. NT$582.94 billion expected
TSMC net income: NT$225.49 billion, vs. NT$213.59 billion expected
Reported net revenue of TSMC rose 16.5% from a year ago to NT$592.64 billion, while net income increased 8.9% from a year ago to NT$225.49 billion. The firm guided first-quarter revenue to be between $18 billion and $18.8 billion.
TSMC AI chips demand
TSMC is the world’s largest producer of advanced processors and counts companies such as Nvidia and Apple as its clients.
“For the second quarter of 2024, we expect our business to be supported by strong demand for industry-leading 3-nanometer and 5-nanometer technologies, partially offset by a continued smartphone seasonality,” CFO Wendell Huang said during the firm’s earnings call Thursday.
CEO C.C. Wei said TSMC expects 2024 to be a “healthy” growth year, supported by “our technology leadership and broader customer base.”
“Almost all the AI innovators are working with TSMC to address an insatiable AI-related demand for energy efficient computing power,” said Wei, adding that the firm estimates revenue contribution from server AI processors to “more than double this year.”
TMC Q2 forecast
TSMC expects second-quarter revenue to be between $19.6 billion and $20.4 billion.
TSMC currently produces 3-nanometer chips and plans to commence mass production of 2-nanometer chips in 2025. Typically, a smaller nanometer size yields more powerful and efficient chips.
TSMC accounted for 61% of global foundry revenue in the fourth quarter, according to Counterpoint Research data. Samsung Foundry came in second with 14% of the market.
Last year, TSMC’s business was impacted by macroeconomic headwinds and inventory adjustment. Smartphone and PC makers stockpiled chips during the pandemic, leading to surplus inventories as Covid-era demand waned.
TSMC U.S. subsidy
The U.S. also recently granted TSMC’s Arizona subsidiary preliminary approval for government funding worth up to $6.6 billion to build the world’s most advanced semiconductors. TSMC is also eligible for about $5 billion in proposed loans.
TSMC stock
Strong demand for AI chips led by the proliferation of large language models such as ChatGPT and Chinese clones has caused TSMC’s shares to surge 56% in the past one year.
