TSMC Projects 30% Growth in Second-Quarter Revenue

TSMC, the world’s leading chipmaker and a key supplier to tech giants like Apple and Nvidia, is expecting revenue of $19.6-$20.4 billion, gross profit margin of 51-53 percent and operating profit margin of 40-42 percent in Q2 2024.
TSMC for iPhonesHsinchu, Taiwan-based TSMC has projected a 30 percent increase in second-quarter sales, expecting that there will be strong demand for semiconductors used in artificial intelligence (AI) applications.

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TSMC Q1 Revenue

TSMC has posted revenue of $18.87 billion or NT$592.64 billion (up 16.5 percent) and net income of NT$225.49 billion (up 8.9 percent) for the first quarter ended March 31, 2024.

TSMC’s gross margin for the quarter was 53.1 percent, operating margin was 42.0 percent, and net profit margin was 38.0 percent.

TSMC said shipments of 3-nanometer accounted for 9 percent of total wafer revenue; 5-nanometer accounted for 37 percent; 7-nanometer accounted for 19 percent. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 65 percent of total wafer revenue.

“Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued HPC-related demand,” said Wendell Huang, Senior VP and Chief Financial Officer of TSMC.

TSMC expects its business will be supported by strong demand for 3nm and 5nm technologies, partially offset by smartphone seasonality. Global smartphone shipments rose 7.8 percent to 289.4 million units in the first quarter of 2024. IDC estimates that smartphone market will grow at 2.8 percent in 2024.

“The smartphone market is emerging from the turbulence of the last two years both stronger and changed,” said Nabila Popal, research director with IDC’s Worldwide Tracker team.

During TSMC’s first-quarter earnings call, CEO C.C. Wei highlighted the demand for energy-efficient computing power from AI innovators, emphasizing the company’s central position in addressing this insatiable market demand. The transition from traditional servers to AI servers is deemed favorable for TSMC, reflecting the evolving landscape of technology infrastructure.

Benefiting from the AI wave, TSMC has successfully navigated through the decline in electronics demand resulting from the tapering off of the COVID-19 pandemic. The company’s stock performance has surged to record highs, reflecting investor confidence in its ability to capitalize on emerging trends in the semiconductor market.

TSMC anticipates that AI servers will contribute to a significant portion of its revenue, with projections indicating a substantial increase from previous years. However, the demand for auto chips is expected to decline this year compared to earlier estimates.

Despite some headwinds, TSMC remains optimistic about the second quarter, citing strong demand for its advanced 3 nanometer (nm) and 5nm technologies. However, sluggish demand for smartphones is expected to partially offset this strength.

Maintaining its guidance for capital spending this year, TSMC aims to allocate 70 percent-80 percent of its capital expenditure towards advanced technologies. Looking ahead to 2024, the company expects revenue to rise in the low- to mid-20 percent range in U.S. dollar terms, though it acknowledges ongoing macroeconomic and geopolitical uncertainties.

Baburajan Kizhakedath