Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) reported better first-quarter profits than expected even though it said chip sales were held back by a slower recovery in demand from smartphone and PC markets than anticipated.
Net profit for the world’s largest chip manufacturer came in at NT$225.49 billion (US$7.2 billion), up 8.9% year on year thanks to higher demand for high-performance chips used to power artificial intelligence.
Revenues increased 16.5% to NT$592.6 billion, towards the upper end of the company's guidance. In US dollars, first-quarter revenue increased 13% year on year to $18.87 billion but was down 3.8% from the previous quarter.
“Our business in the first quarter was impacted by smartphone seasonality,” said chief financial officer Wendell Huang, though he said this was partially offset by continued demand related to high-performance computing (HPC), which powers generative AI and other leading-edge tech.
“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.”
CEO CC Wei said the company expects revenue this quarter to grow to US$19.6-20.4 billion but remains cautious about how the global consumer electronics market might be affected by macroeconomics and geopolitical uncertainties.