Thursday, April 18, 2024

Chips: TSMC Beats, Stock Drifts (plus a warning) TSM

In Taiwan the stock was up around 1%, pre-market U.S., down 1.5%.

From Reuters via Yahoo Finance, April 18:

TSMC expects Q2 sales to jump on 'insatiable' AI demand 

  • Sees Q2 revenue at $19.6-$20.4 bln vs $15.68 bln year earlier
  • Forecasts 2024 revenue to rise in low- to mid-20% range in USD
  • TSMC Q1 net profit rises 9%, beats forecasts
  • Stock price has surged on chip demand for AI applications

(Recasts with comments from earnings conference)

By Yimou Lee and Faith Hung

TAIPEI, April 18 (Reuters) -

TSMC, the world's largest chipmaker and a major Apple and Nvidia supplier, forecast second-quarter sales may rise as much as 30% as it rides a wave of demand for semiconductors used in artificial intelligence (AI) applications.

The surging need for processors for AI left executives at Taiwan Semiconductor Manufacturing Co (TSMC), which investors watch closely as a bellwether for the chip industry, plainly stating just how strong the demand was.

"Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy efficient computing power," CEO C.C. Wei said during the company's first-quarter earnings call.

"AI-related data centre demand is very, very strong," he said, adding that the shift from traditional servers to AI servers is "favourable" to TSMC.

TSMC has benefited from the AI wave that has helped it weather the tapering off of COVID-19 pandemic-led electronics demand and pushed the company's stock to a record.

AI servers are expected to account for a low-teens percentage of its 2024 revenue, more than double from last year, with that figure rising to more than 20% of revenue by 2028, it said.

Demand for auto chips would fall this year, compared with a previous estimate of growth, it added.

Looking ahead, TSMC said it expects business in the second quarter to be supported by strong demand for its industry-leading 3 nanometre (nm) and 5nm technologies, although that strength would be partially offset by sluggish demand for smartphones....


And at the Wall Street Journal, April 18:

Chip Giant TSMC Offers Reassurance—and a Warning
Semiconductor investments required for rapid growth of artificial intelligence are on track 

The chip industry is recovering more slowly than expected from the inventory glut of 2023.

That was the bad news from Taiwan Semiconductor Manufacturing Co, the world’s largest contract chip maker, which reported first-quarter results Thursday. On a call with analysts, the company cut its forecast for overall market growth this year, excluding memory chips, to 10%, down from “more than 10%” three months ago. Its U.S.-listed shares fell roughly 2% in premarket trading.

The standout reason for the downgrade was automotive chips: TSMC previously expected demand from the sector to increase this year, but now it expects a contraction instead. The company didn’t give an explanation, but the most likely one is slowing growth in chip-intensive electric vehicles.

The good news for TSMC investors is that the company, despite often being seen as a chip-industry bellwether, isn’t the same thing as the market. Importantly, the company maintained its forecast that its own revenue will grow by more than 20% this year in dollar terms.

Partly this is because it is a pure foundry operation—TSMC only makes chips designed by others—and the foundry business has more room to recover, having suffered more in the recent slump. At the same time, the company’s lead in manufacturing the most advanced chips also makes it a disproportionate beneficiary of the industry’s biggest growth driver: artificial intelligence....


Here's the SEC filing on Form 20-F