BING-JHEN HONG
Taiwan Semiconductor Manufacturing (NYSE:TSM) stock rose about 2% premarket on Thursday after first quarter results beat estimates and the company’s second quarter revenue outlook exceeded expectations.
First quarter revenue grew 12.9% year-over-year to $18.87B (NT$592.64B, +16.5% Y/Y). EPS per American Depositary Receipt, or ADR, was $1.38, compared to $1.31 in the first quarter of 2023. Both top and bottom line numbers surpassed analysts expectations. Net income grew 8.9% year-over-year to NT$225.49B.
The company saw a 3.8% decline in revenue (in US$ terms) when compared to the fourth quarter of 2023 wherein $19.62B were generated. Earlier this month, TSM had reported its first quarter 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 CFO of TSM in a press release.
TSM — which produces chips for some of the world’s largest tech companies including Apple (AAPL), Nvidia (NVDA) and AMD (AMD) — has seen a rise in demand for semiconductors used in artificial intelligence, or AI, applications.
Outlook:
However, TSM CEO C. C. Wei noted that the company was revising downward its expectations for 2024 semiconductor market growth, excluding memory chips, to about 10%, from above that figure. Wei also cut the growth forecast for the foundry sector, which the company leads. However, Wei maintained a forecast of spending in the range of $28B to $32B on capacity expansion and upgrades this year, according to a report from Bloomberg News.
TSMC continues to expect revenue to increase by at least 20% this year.
For the second quarter, TSM expects revenue to be between $19.6B and $20.4B, while consensus revenue estimate is $19.08B.
“Moving into second quarter 2024, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality,” said CFO Wendell Huang in the press release.
TSM executives noted that it will start mass production of next-generation 2nm chips in the last quarter of 2025, trimming the timeframe from next year in general. In addition, Wei noted that the company’s automotive business will decline this year, compared to previous projections for a rise, the report added.
Revenue by Technology:
TSM noted that 3nm process technology contributed 9% of total wafer revenue in the first quarter of 2024, versus 0% in the year ago period, but was down when compared to the fourth quarter of 2023, when it contributed 15%.
Meanwhile, 7nm accounted for 19% of total wafer revenue in the first quarter versus 20% a year earlier, and 17% in the fourth quarter of ’23. The 5nm process technology accounted for 37% of total wafer revenue in the first quarter, compared to 31% in the same period a year ago, and 35% in the fourth quarter of 2023.
Advanced technologies (7nm and below) accounted for 65% of total wafer revenue.
Revenue By platform:
High Performance Computing, or HPC, represented 46% of net revenue, versus 44% a year earlier, and 43% in the fourth quarter of 2023. Smartphone represented 38% of net revenue, which was higher, compared to 34% in the year ago period, but lower, compared to 43% seen in the fourth quarter of 2023.
Revenue by Geography:
In the first-quarter, revenue from China — the second biggest market by revenue for TSM — accounted for 9% of the total net revenue, down from 15% in the year-ago period and 11% in the fourth quarter of 2023.
North America remained the biggest market with 69% of total net revenue coming from it, compared to 63% a year earlier, and 72% in the fourth-quarter of 2023.