Taiwanese Chip Giant TSMC Posts Better-than-expected Q1 Results

UTC by Tolu Ajiboye · 3 min read
Taiwanese Chip Giant TSMC Posts Better-than-expected Q1 Results
Photo: Wikimedia Commons

TSMC posted Q1 profit that climbed 45% YoY to NT$202.73 billion, beating out analysts’ expectations of NT$184.67 billion.

The world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC), outperformed on its latest Q1 showings. Posted on Thursday, the report revealed a record high net profit for the first quarter, globally viewed as a slow season in that industry. Profits surged 45% to NT$202.73 billion ($6.99 billion), aided by a boom in semiconductor sales from high product demand. In the first quarter, consolidated sales climbed by a quarterly 11.6% to $17.57 billion, exceeding previous guidance of between $16.6 billion and $17.2 billion.

The same impressive sales volume eventually led to the supply shortage of chips during the pandemic. Additionally, the Taiwanese chip giant’s first-quarter gross margin was 55.6%, which also surpassed its own forecast of between 53% and 55%.

TSMC’s net profits for Q1 beat out analysts’ expectations of T$184.67 billion. In addition, the results also mark a 22% increase from the preceding quarter. Furthermore, shares of the leading semiconductor company, a major Apple Inc supplier, are now trading at NT$7.82. According to Alex Huang, an analyst at Mega International Investment Services Corp:

“The first-quarter earnings per share also surpassed an earlier market estimate of NT$7.3 to NT$7.4. For TSMC, there were no slow season effects at all in the first quarter.”

Furthermore, Huang spoke on TSMC’s strong sales volume saying:

“Strong global demand for emerging technologies led to full capacity utilization at TSMC. In addition, the chipmaker benefited from a weaker Taiwan dollar in the first quarter, as it converted its sales into the local currency.”

TSMC’s initial sales forecast in mid-January considered the then prevailing exchange rate of NT$27.6 against the US dollar. However, by the end of March, the rate had dropped to NT$28.622.

With Q1 Done & Dusted, TSMC Sets Bigger Sales & Revenue Targets for Q2

With a rousing Q1 performance achieved, TSMC now has its sights set on the ongoing second quarter, which concludes on June 30th. The prominent chip company forecasts a 37% climb in current-quarter sales, although it expects chip capacity to remain very tight this year. This shortage may still see an overflow in chip orders as well as much higher-than-normal prices for the products. TSMC’s chief executive officer C.C. Wei stated that his company was working to address the supply chain constraints with tool suppliers (makers of chip equipment).

“Our suppliers are facing great challenges in their supply chain from the continued impact of COVID-19, which are creating labor, component and chip constraints in their supply chains, and extending tool delivery time for both advanced and mature nodes,” explained Wei.

For Q2, TSMC also forecasts revenue between $17.6 billion and $18.2 billion, a $13.29 billion increase. In addition, the chip manufacturer also stated that it expected chip demand to continue for a sustained period. According to Wei, this “mega-trend” is supported by demand for HPC chips for 5G and artificial intelligence, among other uses.

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