TSMC Q1 2024 earnings on strong AI chip demand

• 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.

“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 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 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.

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.

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.

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