🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

TSMC first-quarter profit expected to rise 5% on strong AI chip demand

Published 04/15/2024, 08:53 PM
Updated 04/15/2024, 08:56 PM
© Reuters. A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
TSM
-

By Ben Blanchard and Faith Hung

TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co, the dominant producer of advanced chips used in artificial intelligence applications, is expected to report a 5% rise in first-quarter profit on Thursday thanks to strong demand.

The world's largest contract chipmaker, whose customers include Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), has benefited from a surge towards AI that has helped it weather the tapering off of pandemic-led electronics demand and pushed TSMC's stock to a record high.

TSMC is set to report a net profit of T$217.2 billion ($6.71 billion) for the quarter ended March 31, according to an LSEG SmartEstimate drawn from 22 analysts. SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.

That compares to the first-quarter net profit of T$206.9 billion last year.

TSMC last week reported a 16.5% rise in first-quarter revenue, beating market expectations and at the high end of the company's own guidance.

Eric Yao, a vice president at Taiwan's Eastspring Investments, which manages about T$90 billion of client assets in Taiwanese stocks, said the $6.6 billion in U.S. subsidies for TSMC's new Arizona plants augured well for its prospects of maintaining its lead in advanced process technologies.

"TSMC will likely continue to lead in that front, and Intel (NASDAQ:INTC) and Samsung (KS:005930) will not have much chance to catch up," he said, referring to two rivals who want to challenge the company's dominance.

Intel this month disclosed deepening operating losses for its foundry business, a blow to the chipmaker as it tries to regain a technology lead it lost in recent years to TSMC, which also announced last week it would build a third fab in Arizona.

Fubon Securities analysts said they expected TSMC to revise up its outlook for AI demand for future years.

"TSMC previously indicated that AI could account for high-teens of its revenue by 2026, but based on our calculation, we think the target could be reached earlier in 2025."

The AI boom has helped drive up the price of shares in Asia's most valuable company, with TSMC's Taipei-listed stock having surged 36% so far this year to a historic high, compared with a 14% gain for the broader market.

© Reuters. A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

TSMC is due to hold an earnings call at 0600 GMT on Thursday.

($1 = 32.3890 Taiwan dollars)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.