TSMC Q4 profit beats estimates as chip sales rise
Taiwan Semiconductor Manufacturing Co (TSMC) reported a smaller-than-expected decline in its fourth-quarter profit, thanks to increased sales of its most advanced chips. The world’s largest contract chipmaker witnessed a boost in revenue as demand for its 3-nanometer chips, which are described as the industry’s most advanced semiconductor technology, improved. This trend is indicative of a growing market for high-performance computing chips, driven by the increasing interest in artificial intelligence (AI) development.
TSMC’s profit for the three months ending December 31 totaled T$238.7 billion ($7.6 billion), down from T$295.9 billion last year. Despite the decline, the company’s per-share profit of T$9.21 exceeded the estimates of T$8.67 by Investing.com. The consolidated revenue for the fourth quarter remained largely unchanged from the previous year at T$625.5 billion ($20 billion), surpassing both estimates and TSMC’s own forecast for the year.
TSMC CEO: AI demand to support chip sales in 2024
TSMC’s CEO, C.C. Wei, emphasized the company’s positive outlook for the coming year, stating that chip demand will be supported by strong demand for artificial intelligence. According to Wei, the increasing need for more powerful semiconductor hardware to support AI models is driving the value of TSMC’s technology position. As AI development requires significant computing power, there is a higher demand for advanced and higher-power silicone, positioning TSMC as a key player in this growing market.
TSMC’s Q4 profit falls 19% but beats expectations
Despite a 19% decline in profit compared to the previous year, TSMC’s fourth-quarter earnings surpassed expectations. The decline can be attributed to various factors, including weak electronics demand, easing technology investment, and high interest rates. However, TSMC’s strong performance in the chip market, especially in the AI sector, has helped offset these challenges. TSMC’s consistent delivery of better-than-expected earnings throughout 2023 has bolstered investor confidence and contributed to a significant rally in its Taiwan stock, which surged over 30% in the past year.
TSMC forecasts slightly weaker performance in Q1 2024
Looking ahead, TSMC expects slightly weaker performance in the first quarter of 2024. The company anticipates sales to range between $18 billion and $18.8 billion, with a gross margin of 52% to 54%. Despite this outlook, TSMC remains optimistic about the future, citing robust AI-related demand as a key driver for growth in 2024. The company’s commitment to investing in high-computing chips, with an estimated capital expenditure of $28 billion to $32 billion, underscores its focus on meeting the increasing demand for AI hardware.
TSMC’s revenue remains unchanged in Q4, beats estimates
TSMC’s revenue for the fourth quarter of 2023 remained largely unchanged from the previous year at T$625.5 billion ($20 billion). However, this revenue exceeded both estimates and TSMC’s own forecast for the year. The consistent demand for advanced chips, especially the industry-leading 3-nanometer chips, has contributed to TSMC’s resilient performance. As the world’s largest contract chipmaker and a key supplier to technology giants such as Apple and Nvidia, TSMC is well-positioned to capitalize on the increasing demand for AI-related hardware and benefit from the ongoing technological advancements in the industry.
Analyst comment
Positive news: TSMC Q4 profit beats estimates as chip sales rise and AI demand to support chip sales in 2024, says TSMC CEO.
Neutral news: TSMC’s Q4 profit falls but beats expectations and TSMC’s revenue remains unchanged in Q4, beats estimates.
Negative news: TSMC forecasts slightly weaker performance in Q1 2024.
As an analyst, the market is expected to continue growing in the coming years due to the increasing demand for high-performance computing chips driven by AI development. TSMC’s strong performance in the chip market, particularly in the AI sector, and its commitment to investing in advanced chips will help it maintain its position as the world’s largest contract chipmaker and benefit from the growing market. TSMC’s weaker Q1 2024 forecast may have a slight negative impact on the market in the short term, but the overall outlook remains positive.
