“TSMC Beats Revenue Expectations Amidst Strong Demand for Advanced Chips”

Scarlett MLast Updated: April 18, 2024

Taiwan Semiconductor Manufacturing Company (TSMC) exceeded revenue and profit expectations in the first quarter, driven by robust demand for advanced chips, particularly in AI applications.

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TSMC

Here are TSMC’s first-quarter results compared to LSEG consensus estimates:

Net revenue: 592.64 billion New Taiwan dollars ($18.87 billion), surpassing the expected NT$582.94 billion
Net income: NT$225.49 billion, higher than the expected NT$213.59 billion

TSMC reported a 16.5% increase in net revenue from the previous year, reaching NT$592.64 billion, while net income rose by 8.9% to NT$225.49 billion. The company projected first-quarter revenue to range between $18 billion and $18.8 billion.

As the largest producer of advanced processors globally, TSM serves clients such as Nvidia and Apple.

During the earnings call, CFO Wendell Huang anticipated strong second-quarter demand for 3-nanometer and 5-nanometer technologies, tempered by seasonal trends in the smartphone market. CEO C.C. Wei expressed optimism for 2024, foreseeing healthy growth supported by technological leadership and a broadening customer base.

TSM expects second-quarter revenue to range from $19.6 billion to $20.4 billion.

Currently manufacturing 3-nanometer chips, TSM plans to commence mass production of 2-nanometer chips in 2025, leveraging smaller nanometer sizes to produce more potent and efficient chips.

The surge in demand for AI chips, fueled by the proliferation of large language models like ChatGPT and Chinese clones, has propelled TSMs shares up by 56% over the past year.

Grzegorz Drozdz, market analyst at Conotoxia, highlighted TSM strong competitive position, evidenced by its net profit margin of 40%, significantly surpassing the industry average of 14%.

Despite challenges such as macroeconomic headwinds and inventory adjustments, has demonstrated resilience. The recent earthquake in Taiwan had minimal impact on TSM’s operations, with construction sites and critical tools remaining intact. Although some wafers were affected, the company anticipates minimal revenue impact, with most lost production expected to be recovered in the second quarter.