A logo of Taiwan Semiconductor Manufacturing Company (TSMC) is seen during the opening ceremony of the TSMC global RnD Center in Hsinchu on July 28, 2023. (Photo by Amber Wang / AFP)
Amber Wang | Afp | Getty Images
Taiwan semiconductor manufacturing company on Thursday beat first-quarter revenue and profit expectations, driven by continued strong demand for advanced chips, particularly those used in AI applications.
Here are TSMC’s first quarter results compared to LSEG consensus estimates:
- Net revenue: NT$592.64 billion ($18.87 billion), compared to NT$582.94 billion expected
- Net revenue: NT$225.49 billion, compared to NT$213.59 billion expected
TSMC said its net revenue increased 16.5% from last year to NT$592.64 billion, while net profit increased 8.9% from last year. last year to reach NT$225.49 billion. The company expects 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 among its customers.
“For the second quarter of 2024, we expect our business to be supported by strong demand for the industry’s leading 3- and 5-nanometer technologies, partially offset by continued smartphone seasonality,” CFO Wendell Huang said during the company’s earnings conference call on Thursday. .
CEO CC Wei said TSMC expects 2024 to be a year of “healthy” growth, supported by “our technology leadership and broader customer base.”
“Nearly all AI innovators are working with TSMC to meet an insatiable demand for energy-efficient AI-related computing power,” Wei said, adding that the company estimates that the revenue contribution of AI processors for servers “will more than double this year”.
TSMC expects second-quarter revenue to be between $19.6 billion and $20.4 billion.
TSMC currently produces 3-nanometer chips and plans to begin mass production of 2-nanometer chips in 2025. Typically, a smaller nanometer size produces more powerful and more efficient chips.
Strong demand for AI chips, driven by the proliferation of large language models such as ChatGPT and Chinese clones, has sent TSMC shares up 56% over the past year.
“TSMC is well positioned to deliver strong performance based on key industry trends. Continued demand for advanced chips, especially those used in AI applications, is a positive sign in both the short and long term. “The focus on developing advanced chips, such as the shift to 3nm technology, is another long-term growth driver for TSMC,” Brady Wang, associate director at Counterpoint Research, said Monday ahead of the earnings release. .
TSMC accounted for 61% of global foundry revenue in the fourth quarter, according to data from Counterpoint Research. Samsung Foundry comes in second place with 14% of the market.
“TSMC’s net profit margin continues to be one of the highest in the company’s history at 40%, compared to 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 below. chips, which have significantly higher margins,” Grzegorz Drozdz, a market analyst at Conotoxia, said last week.
Last year, TSMC’s business was affected by macroeconomic headwinds and inventory adjustment. Smartphone and computer makers stockpiled chips during the pandemic, leading to excess inventories as Covid-era demand waned.
Earlier this month, Taiwan was hit by an earthquake – the most powerful in 25 years. A TSMC spokesperson said its construction sites were normal during the initial inspection, although workers at some factories were briefly evacuated. These workers then returned to their workplace.
“There was no power outage, no structural damage to our factories and no damage to our critical tools, including all of our extreme ultraviolet lithography tools,” CFO Huang told investors and analysts on Thursday.
EUV machines are essential to the production of the most advanced processors.
However, some wafers were affected and “had to be scrapped,” Huang said, adding that the company expects most of the lost production to be recovered in the second quarter, with “minimal impact » on income.
The United States 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 approximately $5 billion in proposed loans.
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