Chip giant TSMC’s pro ts surge nearly 9% in Q1 on AI demand

SEMICONDUCTOR giant TSMC announced on Thursday a nearly 9% rise in net profits in the first quarter of 2024 spurred by global demand for its microchips used to power everything from mobile phones to AI technology.

The Taiwan Semiconductor Manufacturing Company (TSMC), whose clients include Apple and Nvidia, controls more than half the world’s output of silicon chips, which have been called the “lifeblood” of the modern world.The company said Thursday that its net profit increased 8.9% on-year in January-March to NT$225.4 billion ($6.97 billion) compared to NT$206.9 billion in the same period last year.

First-quarter revenues also rose 13% year-over-year to $18.87 billion, it said.

CFO Wendell Huang also said during an earnings call Thursday that TSMC expects its second-quarter revenues to increase by 27.6%.

The TSMC, which produces some of the most advanced microchips in the world, dominates the chip-making industry, as well as its customer U.S.-based Nvidia.

The bulk of its fabrication plants making its most hightech products are based in Taiwan, which is also prone to natural disasters like earthquakes, which at times raises concerns over supply challenges.

Earlier this month, a massive magnitude-7.4 quake hit Taiwan and “a certain number of wafers in the process were impacted and had to be scrapped,” Huang said.”

But we expect most of the lost production to be recovered in the second quarter and thus minimum impact to the second quarter revenue,” he said.

The firm had also earlier this month announced plans to build a third semiconductor factory in Arizona – adding to the two fabrication units already in progress there.

The preliminary agreement with the U.S. Commerce Department – tied to a major investment law called the

Chips and Science Act – would see TSMC receiving up to $6.6 billion in direct funding from the U.S. government.

That would raise its total investment in the United States to $65 billion.

“In Arizona, we have received the strong commitment and support from our U.S. customers and plan to build three fabs ...

We have made significant progress in our first fab, which has already entered engineering wafer production in April,” said CC Wei, the company’s CEO.

“We are well on track for volume production in the first half of 2025.” He added that the second fab in Arizona has been upgraded “to utilize 2-nanometer technologies to support the strong AI-related demand in addition to the previously announced 3-nanometer” chips.

TSMC’s projects in Arizona have faced some obstacles in the past year, which the company had attributed to a lack of human resources, as making microchips requires a highly specialized skillset.

But if successful, the TSMC fabs in Arizona would be the “first time” that superadvanced chips will be made on American soil, said U.S. Commerce Secretary Gina Raimondo earlier this month.