TSMC (Taiwan Semiconductor Manufacturing Corporation) reported profits for the first quarter of fiscal year 2024. The profit exceeded what was expected due to the increased demand of semiconductors as a result of the artificial intelligence industry’s massive growth.
The estimated income forecast by Reuters was T$218.1 ($6.7 billion) for the first quarter of 2024, but the announced figure exceeded that by a big margin. TSMC reported a net income of T$225.49 (Taiwanese dollar), which is quite higher than last year’s net income, which was T$206.00 billion.
TSMC reports a 16% growth in sales.
Back in 2023, TSMC faced low demand for silicon due to fewer chip requirements in the market, which provided a lower base for comparison with the current earnings. Due to this stronger year-on-year rise, the percentage of income improvement is 16.5%, amounting to T$592.64 billion in revenue for the first quarter.
Another factor to consider is that the Taiwan dollar saw a decline during this time, which also helped in boosting TSMC earnings in USD.
The improvement in revenue and profit is also due to the increasing demand for silicon chips in the artificial intelligence sector. TSMC is an important player in the chip making industry and one of the largest manufacturer, its earnings and sales are also considered a barometer for global silicon demand.
Major tech firms like Nvidia and Apple rely on TSMC for Semiconductors
Some major tech firms also provide a good loyalist base for TSMC to be the largest chipmaker in the world for contractual manufacturing. Its big customers include Nvidia and Apple, which rely on TSMC for some part of their chip needs.
TSMC CEO C.C. Wei said,
“Almost all the AI innovators are working with TSMC to address an insatiable AI-related demand for energy-efficient computing power,” adding “more than double this year.”
TSMC VP and CFO, Wendell Huang, expected better results for Q2, he said,
“Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued HPC-related demand.”
He also added,
“Moving into second quarter 2024, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality.”
Source: TSMC.
Nvidia is the innovator of some of the highly advanced AI chips that are currently available on the market, and this also makes it one of the important buyers and a good source of demand.
TSMC is also expecting a 30% rise in sales for the second quarter. This assumption is based on the increasing demand for semiconductors used in AI applications, especially data centers, which demand chips in huge quantities. Datacenters are shifting from traditional servers to AI capable servers, which has had a good impact on TSMC profits.
The original report is available here and TSMC report can be seen here.
