Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported a 35 percent increase in quarterly revenue, suggesting that global artificial intelligence (AI) chip demand remained intact during the first weeks of war in the Middle East.
Revenue for the first three months of the year rose to NT$1.13 trillion (US$35.62 billion), TSMC said.
Analysts estimated NT$1.12 trillion on average.
Photo: Daniel Ceng, AP
Sales last month rose 45 percent.
The report might help quell concerns that a prolonged crisis in the Middle East would dampen demand for power-hungry AI data centers and gadgets such as the iPhone. The war has put pressure on global shipping routes and energy prices, and investors are looking for clues as to whether its impact would spread to tech giants’ spending plans.
TSMC and AI customers such as Nvidia also face increasing skepticism that they could keep growing at current rates. After explosive sales turned Nvidia into the world’s most valuable company and TSMC the most valuable company in Asia, investors are seeking assurances that booming AI spending can be maintained.
TSMC’s results in the first quarter are likely to beat the guidance midpoint — and consensus — given sustained strong demand for 3 and 5-nanometer nodes used in AI accelerators and networking-chip production.
Favorable appreciation of the US dollar against New Taiwan dollar provides a further tailwind.
It is calculated that the gross margin could reach a record high of 65 percent at least.
The earnings call would focus on management’s view on Android smartphone and PC demand (especially whether higher memory costs might prompt another inventory correction); and if fab operations and the 2H margin could be pressured by any disruption to chemicals or energy supply, or higher related costs.
Another item to watch would be if sustained, multiyear AI chip demand and strength in leading-edge nodes supports raising the long-term gross margin target above 58 percent, Bloomberg analyst Charles Shum said.
TSMC is to report full first quarter results on Thursday next week.
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