Taiwan Semiconductor Manufacturing Company (TSMC) reported better-than-expected revenue and profit in the first quarter of the year, driven by strong demand for advanced chips, particularly those used in AI applications. The company’s net revenue reached 592.64 billion New Taiwan dollars, while net income was NT$225.49 billion, marking increases of 16.5% and 8.9%, respectively, from a year ago. TSMC, the world’s largest producer of advanced processors with clients like Nvidia and Apple, expects first-quarter revenue to be between $18 billion and $18.8 billion.
According to industry experts, TSMC is in a strong position for continued growth, driven by trends such as the demand for advanced chips used in AI applications. The company’s focus on advanced chip development, including the shift towards 3nm technology and plans for mass production of 2nm chips in 2025, is expected to contribute to its long-term success. The strong demand for AI chips, fueled by the increasing use of large language models, has led to a 56% surge in TSMC’s shares over the past year. TSMC currently accounts for 61% of global foundry revenue, with its net profit margin at 40%, significantly higher than the industry average of 14%.
TSMC’s high margin can be attributed to an increased share of sales of 7nm and smaller chips, which have higher margins. The company’s competitive position is further strengthened by its ongoing developments in advanced chip manufacturing technologies. Additionally, the U.S. recently granted preliminary approval for government funding worth up to $6.6 billion to TSMC’s Arizona subsidiary for building the world’s most advanced semiconductors. TSMC could also be eligible for about $5 billion in proposed loans, further enhancing its capabilities in chip production.
Despite facing challenges like the recent earthquake in Taiwan, TSMC’s operations remain relatively unaffected. The company’s construction sites were reported to be normal upon initial inspection, with workers from some fabs briefly evacuated but subsequently returning to their workplaces. This incident highlights the resilience of TSMC’s operations and its ability to adapt to unexpected events. As a key player in the semiconductor industry, TSMC continues to lead in advanced chip manufacturing and is well-positioned for future growth.
In conclusion, TSMC’s strong performance in the first quarter demonstrates its ability to meet and exceed market expectations, driven by the increasing demand for advanced chips, particularly those used in AI applications. The company’s focus on innovative chip technologies, high profit margins, and strategic partnerships position it for continued success in the global semiconductor market. With ongoing developments in advanced chip manufacturing and substantial government funding support, TSMC is poised to maintain its leadership in the industry and capitalize on future growth opportunities.
