A logo of Taiwan Semiconductor Manufacturing Company (TSMC) is seen during the TSMC global RnD Center opening ceremony in Hsinchu on July 28, 2023. (Photo by Amber Wang / AFP)
Amber Wang | Afp | Getty Images
Taiwan Semiconductor Manufacturing Company on Thursday beat revenue and profit expectations in the first quarter, thanks to continued strong demand for advanced chips, particularly those used in AI applications.
Here are TSMC’s first-quarter results versus LSEG consensus estimates:
– Net revenue: 592.64 billion New Taiwan dollars ($18.87 billion), vs. NT$582.94 billion expected
– Net income: NT$225.49 billion, vs. NT$213.59 billion expected
TSMC reported net revenue 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 is the world’s largest producer of advanced processors and counts companies such as Nvidia and Apple as its clients.
“TSMC is well-positioned for strong performance based on key industry trends. The continued demand for advanced chips, particularly those used in AI applications, is a positive sign for both the short and long term. The focus on advanced chip development, like the shift towards 3nm technology, is another factor driving long-term growth for TSMC,” Brady Wang, associate director at Counterpoint Research, said on Monday ahead of the results.
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.
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.
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.
“TSMC’s net profit margin continues to be one of the highest in the company’s history at 40%, against an industry average of 14%, demonstrating TSMC’s strong competitive position. The high margin is the result of an increased share of sales of 7nm and smaller chips, which have significantly higher margins,” Grzegorz Drozdz, market analyst at Conotoxia, said last week.
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.
Earlier this month, Taiwan was hit by an earthquake – its strongest one in 25 years. A TSMC spokesperson said its construction sites were normal upon initial inspection, though workers from some fabs were briefly evacuated. Those workers subsequently returned to their workplaces.
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Taiwan Semiconductor Manufacturing Company (TSMC) reported better-than-expected revenue and profit in the first quarter of the year, driven by strong demand for advanced chips used in AI applications. The company’s net revenue increased by 16.5% from the previous year to NT$592.64 billion, while net income rose by 8.9% to NT$225.49 billion. TSMC, the world’s largest producer of advanced processors, expects first-quarter revenue to be between $18 billion and $18.8 billion. The firm is well-positioned for strong performance due to the continued demand for advanced chips, especially those used in AI applications. TSMC’s focus on advanced chip development, including the shift towards 3nm technology, is expected to drive long-term growth. The company currently produces 3-nanometer chips and plans to start mass production of 2-nanometer chips in 2025. Strong demand for AI chips, driven by the rise of large language models like ChatGPT, has contributed to TSMC’s stock surge. TSMC accounted for 61% of global foundry revenue in the fourth quarter, with Samsung Foundry coming in second at 14%. TSMC’s net profit margin remains high at 40%, well above the industry average of 14%, thanks to increased sales of 7nm and smaller chips with higher margins. The U.S. recently granted TSMC’s Arizona subsidiary preliminary approval for government funding worth up to $6.6 billion to build advanced semiconductors. TSMC also qualifies for about $5 billion in proposed loans. In a separate development, Taiwan was hit by a strong earthquake, but TSMC’s construction sites appeared normal upon initial inspection, and workers returned to their workplaces after a brief evacuation. The company’s strong performance and strategic developments position it well for continued growth in the semiconductor industry.
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