Taiwanese chip manufacturing giant TSMC has reported a significant 58 per cent surge in profits for the first quarter of the year, largely propelled by the burgeoning demand for artificial intelligence technology.
The world's largest contract chipmaker, a crucial supplier to Apple and Nvidia, announced a record net profit of 572.5 billion new Taiwan dollars ($18.1 billion) for the first three months of the year. This is better than analysts had expected.
Profit for the quarter was 58.3 per cent higher compared to the 361.6 billion new Taiwan dollars ($11.5 billion) booked the same period a year earlier.
Profits also climbed 13.2 per cent compared to the preceding October-December quarter. Revenue for January-March rose 8.4 per cent from the previous three months, reaching $35.9 billion.
This impressive growth comes despite rising costs, partly attributed to the Iran war.
In response to sustained AI demand, TSMC is expanding its chip fabrication plants across the US, Japan, and Taiwan, focusing on advanced 3-nanometer semiconductors vital for smartphones and AI products.
For the current April-June quarter, TSMC expected revenue to further grow to between $39 billion and $40.2 billion.
As AI-related demand continues to surge, TSMC has been expanding chip fabrication plants in the US, Japan and Taiwan, with a focus on making more advanced 3-nanometer semiconductors that are used in smartphones and AI products.
“AI-related demand continues to be extremely robust,” C.C. Wei, TSMC’s CEO and chairman, told an earnings conference on Thursday.
“Our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental.”
TSMC also warned of potential impacts from the Iran war, which has not only pushed up global supply chain costs but is also disrupting the world’s supply of chemicals and gas such as helium essential for chipmaking.
Wendell Huang, TSMC’s chief financial officer, said while rising costs stemming from the Iran war could weigh on profitability, the company has “prepared safety stock inventory on hand” including for helium and is not expecting “any near-term impact" on operations.
TSMC has pledged huge investments in expanding its manufacturing capacity in Taiwan and abroad, including $165 billion of commitments in building plants in Arizona.
The company said Thursday its capital spending for the next three years will be “significantly higher” than the past three years as it ramps up capacity to meet customers’ growing demand.
The chipmaker had earlier announced plans to raise its capital expenditure budget to $52 billion-$56 billion for this year from about $40 billion in 2025. It said Thursday it now expects capital spending in 2026 to be toward the higher end of that.
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