Taiwan Semiconductor Manufacturing Company (TSMC) exceeded revenue and profit expectations in the first quarter of the year, thanks to continued high demand for advanced chips, especially those used in artificial intelligence (AI) applications. The company reported a net revenue of 592.64 billion New Taiwan dollars ($18.87 billion) and a net income of NT$225.49 billion, representing increases of 16.5% and 8.9% from the previous year, respectively. TSMC is the largest producer of advanced processors globally and has clients such as Nvidia and Apple. The firm anticipates first-quarter revenue to be between $18 billion and $18.8 billion.
Industry experts believe that TSMC is in a strong position for continued success due to key industry trends. The rising demand for advanced chips, particularly those used in AI applications, is seen as a positive indicator for both the short and long term. TSMC’s focus on advanced chip development, including the transition to 3nm technology, is expected to drive long-term growth for the company. The company currently produces 3-nanometer chips and plans to begin mass production of 2-nanometer chips in 2025, which are anticipated to be more powerful and efficient.
The surge in demand for AI chips, driven by the popularity of large language models like ChatGPT and Chinese clones, has propelled TSMC’s shares up by 56% over the past year. TSMC accounted for 61% of global foundry revenue in the fourth quarter, far ahead of its competitors. The company’s net profit margin of 40% is one of the highest in its history, significantly surpassing the industry average of 14%. This strong margin is a result of a larger share of sales generated from 7nm and smaller chips, which have higher profit margins.
Recently, the U.S. granted preliminary approval for up to $6.6 billion in government funding for TSMC’s Arizona subsidiary to build advanced semiconductors. Additionally, the company is eligible for around $5 billion in proposed loans. This support reflects the strategic importance of semiconductor manufacturing and TSMC’s leading position in the industry. Despite facing challenges like the recent earthquake in Taiwan, which temporarily impacted some of its production facilities, TSMC remains resilient and continues to innovate in the semiconductor sector.
In conclusion, Taiwan Semiconductor Manufacturing Company has exceeded expectations in terms of 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 focus on developing cutting-edge technology like 3nm and 2nm chips positions it well for future growth. With a dominant market share and impressive profit margins, TSMC is a key player in the semiconductor industry. Government support for its expansion plans further solidifies its position as a leader in the sector. Despite challenges like natural disasters, TSMC remains a resilient and innovative force in the global semiconductor market.
