A logo design of Taiwan Semiconductor Manufacturing Company (TSMC) is seen throughout the TSMC international RnD Center opening event in Hsinchu on July 28,2023 (Photo by Amber Wang/ AFP)
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Taiwan Semiconductor Manufacturing Company on Thursday beat profits and earnings expectations in the very first quarter, thanks to continued strong need for innovative chips, especially those utilized in AI applications.
Here are TSMC’s first-quarter outcomes versus LSEG agreement price quotes:
- Net profits: 59264 billion New Taiwan dollars ($1887 billion), vs. NT$58294 billion anticipated
- Net earnings: NT$22549 billion, vs. NT$21359 billion anticipated
TSMC reported net profits increased 16.5% from a year ago to NT$59264 billion, while earnings increased 8.9% from a year ago to NT$22549 billion. The company directed first-quarter profits to be in between $18 billion and $188 billion.
TSMC is the world’s biggest manufacturer of innovative processors and counts business such as Nvidia and Apple as its customers.
“For the second quarter of 2024, we expect our business to be supported by strong demand for industry-leading 3-nanometer and 5-nanometer technologies, partially offset by a continued smartphone seasonality,” CFO Wendell Huang stated throughout the company’s incomes call Thursday.
CEO C.C. Wei stated TSMC anticipates 2024 to be a “healthy” development year, supported by “our technology leadership and broader customer base.”
“Almost all the AI innovators are working with TSMC to address an insatiable AI-related demand for energy efficient computing power,” stated Wei, including that the company approximates profits contribution from server AI processors to “more than double this year.”
TSMC anticipates second-quarter profits to be in between $196 billion and $204 billion.
TSMC presently produces 3-nanometer chips and strategies to start mass production of 2-nanometer chips in2025 Typically, a smaller sized nanometer size yields more effective and effective chips.
Strong need for AI chips led by the expansion of big language designs such as ChatGPT and Chinese clones has actually triggered TSMC’s shares to rise 56% in the previous one year.
“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, stated on Monday ahead of the outcomes.
TSMC represented 61% of international foundry profits in the 4th quarter, according to Counterpoint Research information. Samsung Foundry was available in 2nd with 14% of the marketplace.
“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 expert at Conotoxia, stated recently.
Last year, TSMC’s service was affected by macroeconomic headwinds and stock change. Smartphone and PC makers stocked chips throughout the pandemic, causing surplus stocks as Covid- period need subsided.
Earlier this month, Taiwan was struck by an earthquake– its greatest one in 25 years. A TSMC representative stated its building and construction websites were typical upon preliminary evaluation, though employees from some fabs were quickly left. Those employees consequently went back to their offices.
“There were no power shortages, no structural damage to our fabs and there is no damage to our critical tools, including all of our extreme ultraviolet lithography tools,” CFO Huang informed financiers and experts on Thursday.
EUV makers are vital in the production of the most innovative processors.
However, some wafers were impacted and “had to be scrapped,” stated Huang, including that the company anticipates the majority of the lost production to be recuperated in 2nd quarter, with “minimal impact” to profits.
“We have just guided our second quarter gross margin to decline by 1.1 percentage points to 52% at the midpoint, primarily due to impact from the earthquake on April 3, as just discussed, and higher electricity costs in Taiwan,” stated Huang.
The U.S. likewise just recently approved TSMC’s Arizona subsidiary initial approval for federal government financing worth approximately $6.6 billion to construct the world’s most innovative semiconductors. TSMC is likewise qualified for about $5 billion in suggested loans.
