TSMC set to report 5% rise in first quarter profit on strong AI chip demand

By Thomson Reuters Apr 17, 2024 | 8:31 PM

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 and Nvidia, 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$218.1 billion ($6.74 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.

The company will provide updates on its outlook for the current quarter and the rest of the year on an earnings call at 0600 GMT on Thursday, including capital expenditure which it has previously guided as being in the range of $28 billion to $32 billion this year, compared with last year’s $30.45 billion.

On Wednesday, ASML, the largest supplier of equipment to computer chip makers like TSMC, reported weaker than expected first-quarter new bookings, though sales to China held up despite U.S.-led restrictions.

Company executives could also talk about TSMC’s plans in the U.S. state of Arizona, where it has announced it will build a third factory after winning $6.6 billion in U.S. subsidies.

TSMC leads the world in advanced chip manufacturing, used in everything from smartphones and tablets to fighter jets, though competitors like Intel and Samsung are trying 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. 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 more than 30% so far this year to a historic high, compared with a 12% gain for the broader market.

($1 = 32.3700 Taiwan dollars)

(Reporting by Ben BlanchardEditing by Jamie Freed and Shri Navaratnam)