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TSMC Exceeds Revenue And Profit Projections For The First Quarter Due To Robust Demand For AI Chips

TSMC Exceeds Revenue And Profit Projections For The First Quarter Due To Robust Demand For AI Chips
Taiwan Semiconductor Manufacturing Company (TSMC) on Thursday exceeded first-quarter sales and profit projections, mostly attributable to the persistently high demand for sophisticated circuits, especially those utilised in artificial intelligence applications.
As compared to LSEG consensus estimates, these are TSMC's first-quarter results:
  • Net revenue: NT$582.94 billion vs 592.64 billion New Taiwan dollars ($18.87 billion).
  • Net income: NT$225.49 billion as opposed to the projected NT$213.59 billion
According to TSMC, net income jumped 8.9% to NT$225.49 billion from a year earlier, while net sales increased 16.5% to NT$592.64 billion. The company predicted sales for the first quarter to range from $18 billion to $18.8 billion.
TSMC is the biggest manufacturer of high-tech CPUs globally, serving clients including Apple and Nvidia.
“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.
Presently, TSMC manufactures 3-nanometer chips; in 2025, it intends to start producing 2-nanometer chips in large quantities. Generally speaking, processors with smaller nanoscale sizes are more potent and effective.
TSMC's stock has increased 56% in the last year due to the company's strong demand for AI chips, which is being driven by the emergence of huge language models like ChatGPT and Chinese clones.
According to data from Counterpoint Research, TSMC accounted for 61% of global foundry sales in the fourth quarter. Second place went to Samsung Foundry, 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.
Additionally, the United States recently approved TSMC's Arizona subsidiary's preliminary application for government funding up to $6.6 billion to develop the most cutting-edge semiconductors in the world. Additionally, TSMC qualifies for proposed loans totaling almost $5 billion.
Taiwan had its strongest earthquake in 25 years earlier this month. Although some fab workers were temporarily evacuated, a TSMC representative stated that upon first assessment, the company's construction sites appeared normal. After that, those employees went back to their places of employment.

Christopher J. Mitchell

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