Taiwan Semiconductor Manufacturing Co. building

TSMC rides AI wave to $18.9 billion Q1 revenue

The Taiwan Semiconductor Manufacturing Co. (TSMC) (NASDAQ: TSMWF), the world’s largest semiconductor foundry company, recorded $18.87 billion in first-quarter revenue as it continues to ride the artificial intelligence (AI) wave.

In its Q1 financial results, TSMC reported that it had exceeded analyst expectations by $920 million. Its net income stood at $6.94 billion against an expected $6.58 billion.

Revenue shot up 16.5% from Q1 last year, while net income increased 8.9%. However, both metrics dipped by over 5% from the fourth quarter of 2023.

TSMC is the world’s largest semiconductor foundry, accounting for close to two-thirds of all sales in the previous quarter. Samsung came in at a distant second with 14%. It counts global giants such as Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL) as some of its top customers, being the sole supplier of processor chips for the latter’s iPhones.

CEO C.C. Wei revealed that the company’s success came despite a slow recovery in the smartphone market and lower demand from manufacturers. Global PC sales dipped to 241 million units last year, down from 284 million in 2022, further impacting the firm’s sales.

However, TSMC made up for all the lost revenue from its smartphone and PC sales with AI chips, the CEO revealed. The Taiwanese company joins several other leaders in the field who are making unprecedented fortunes from AI; Microsoft’s (NASDAQ: MSFT) AI ventures pushed it to a $3 trillion valuation in January, and it’s now the largest company globally.

Chipmakers have been the biggest gainers, and Nvidia is the poster child for the sector. From $300 billion in October 2022, Nvidia is worth $2.1 trillion today and ranks only behind Microsoft and Apple in market cap globally. Its valuation has doubled since June 2023.

CEO Wei noted that he expects demand from the AI sector to remain quite strong despite dips in other sectors.

Market experts backed his expectation, with Brady Wang from Counterpoint Research noting that TSMC will remain at the helm.

“TSMC is well-positioned for strong performance based on key industry trends. The continued demand for advanced chips, particularly those used in AI applications, is a positive sign for both the short and long term,” the analyst stated.

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