TSMC offices in San Jose, California, USA, Thursday, April 18, 2024.
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- Revenue: NT$673.51 billion (US$20.82 billion), compared with forecast of NT$657.58 billion
- Net income: NT$247.85 billion vs. NT$238.8 billion LSEG SmartEstimate emphasizes more consistent and accurate analyst forecasts
TSMC announced that its net revenue increased 40.1% year over year to NT$673.51 billion, and its net profit increased 36.3% year over year to NT$247.85 billion. The company expects second-quarter revenue to be in the range of $19.6 billion to $20.4 billion.
Chairman and CEO CC Wei said on an earnings call on Thursday that second-quarter business was driven by strong demand for the company’s industry-leading 3-nanometer and 5-nanometer technologies, offset by continued smartphone seasonality.
Explosive demand for AI is tightening chip supplies. TSMC is the world’s largest maker of advanced chips used in everything from smartphones to AI applications, but rivals including Samsung and Intel are trying to challenge its dominance. The company’s customers include Apple and Nvidia.
“I’m trying to balance supply and demand as well, but I can’t. Right now, demand is so high that we’ve had to work really hard to meet customer demand,” Wei told analysts. “I hope that we’ll be able to balance it out by 2025 or 2026.”
Wei added that he expects steady smartphone and AI-related demand to support the business in the third quarter, and that he expects 2024 to remain “a year of strong growth for TSMC.”
TSMC forecasts third-quarter revenue of $22.4 billion to $23.2 billion, compared with $17.3 billion in the same period last year.
TSMC’s Taiwan-listed shares have risen about 70% so far this year as demand for advanced chips used in AI applications has soared.
The semiconductor giant currently produces 3-nanometer chips and plans to begin mass production of 2-nanometer chips in 2025. Smaller nanometer sizes typically result in more powerful and efficient chips.
TSMC said development of its 2-nanometer technology is “progressing well” and that it is on track to begin mass production in 2025.
“Demand for generative AI in the cloud and at the edge is surging. TSMC’s N3 process boasts good yields and a well-managed production line. The market is well-capitalized and regional political factors are driving increased demand for advanced processes,” Brady Wang, associate director at Counterpoint Research, said on Friday ahead of the earnings release.
Wang said production capacity for the 3-nanometer process is expected to more than double in 2024 from the previous year.
Analysts at Needham on Monday predicted TSMC would raise its 2024 revenue growth target, reiterating their “buy” rating on the U.S.-listed semiconductor giant and raising their price target to $210 from $168.
“TSMC is raising its 2024 revenue growth outlook from ‘low to mid 20s percent’ to ‘mid to high 20s percent’, but expects sales growth to remain steady in 2024. [capital expenditures] “We will set a target of $30 billion at our next earnings call,” Needham said in the note.
TSMC held 62% of the global foundry market share in the first quarter, up from 59% in the same period last year, according to data from Counterpoint Research.
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