A emblem of Taiwan Semiconductor Manufacturing Firm (TSMC) is seen through the TSMC international RnD Heart opening ceremony in Hsinchu on July 28, 2023. (Photograph by Amber Wang / AFP)
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Taiwan Semiconductor Manufacturing Firm on Thursday beat income and revenue expectations within the first quarter, due to continued sturdy demand for superior chips, notably these utilized in AI purposes.
Listed here are TSMC’s first-quarter outcomes versus LSEG consensus estimates:
- Web income: 592.64 billion New Taiwan {dollars} ($18.87 billion), vs. NT$582.94 billion anticipated
- Web revenue: NT$225.49 billion, vs. NT$213.59 billion anticipated
TSMC reported web income rose 16.5% from a yr in the past to NT$592.64 billion, whereas web revenue elevated 8.9% from a yr in the past to NT$225.49 billion. The agency guided first-quarter income to be between $18 billion and $18.8 billion.
TSMC is the world’s largest producer of superior processors and counts firms resembling Nvidia and Apple as its shoppers.
“For the second quarter of 2024, we count on our enterprise to be supported by sturdy demand for industry-leading 3-nanometer and 5-nanometer applied sciences, partially offset by a continued smartphone seasonality,” CFO Wendell Huang mentioned through the agency’s earnings name Thursday.
CEO C.C. Wei mentioned TSMC expects 2024 to be a “wholesome” development yr, supported by “our know-how management and broader buyer base.”
“Nearly all of the AI innovators are working with TSMC to deal with an insatiable AI-related demand for power environment friendly computing energy,” mentioned Wei, including that the agency estimates income contribution from server AI processors to “greater than double this yr.”
TSMC expects second-quarter income to be between $19.6 billion and $20.4 billion.
TSMC at the moment produces 3-nanometer chips and plans to start mass manufacturing of 2-nanometer chips in 2025. Usually, a smaller nanometer measurement yields extra highly effective and environment friendly chips.
Sturdy demand for AI chips led by the proliferation of enormous language fashions resembling ChatGPT and Chinese language clones has brought about TSMC’s shares to surge 56% previously one yr.
“TSMC is well-positioned for sturdy efficiency primarily based on key {industry} traits. The continued demand for superior chips, notably these utilized in AI purposes, is a constructive signal for each the brief and long run. The give attention to superior chip growth, just like the shift in direction of 3nm know-how, is one other issue driving long-term development for TSMC,” Brady Wang, affiliate director at Counterpoint Analysis, mentioned on Monday forward of the outcomes.
TSMC accounted for 61% of worldwide foundry income within the fourth quarter, in line with Counterpoint Analysis knowledge. Samsung Foundry got here in second with 14% of the market.
“TSMC’s web revenue margin continues to be one of many highest within the firm’s historical past at 40%, towards an {industry} common of 14%, demonstrating TSMC’s sturdy aggressive place. The excessive margin is the results of an elevated share of gross sales of 7nm and smaller chips, which have considerably larger margins,” Grzegorz Drozdz, market analyst at Conotoxia, mentioned final week.
Final yr, TSMC’s enterprise was impacted by macroeconomic headwinds and stock adjustment. Smartphone and PC makers stockpiled chips through the pandemic, resulting in surplus inventories as Covid-era demand waned.
Earlier this month, Taiwan was hit by an earthquake – its strongest one in 25 years. A TSMC spokesperson mentioned its development websites had been regular upon preliminary inspection, although staff from some fabs had been briefly evacuated. These staff subsequently returned to their workplaces.
“There have been no energy shortages, no structural harm to our fabs and there’s no harm to our important instruments, together with all of our excessive ultraviolet lithography instruments,” CFO Huang informed buyers and analysts on Thursday.
EUV machines are important within the manufacturing of essentially the most superior processors.
Nevertheless, some wafers had been affected and “needed to be scrapped,” mentioned Huang, including that the agency expects a lot of the misplaced manufacturing to be recovered in second quarter, with “minimal influence” to income.
The U.S. additionally just lately granted TSMC’s Arizona subsidiary preliminary approval for presidency funding value as much as $6.6 billion to construct the world’s most superior semiconductors. TSMC can also be eligible for about $5 billion in proposed loans.