Against the backdrop of sustained strong demand for AI chips, semiconductor manufacturing giant TSMC announced its Q1 2024 financial report and held a performance briefing on the 18th.
According to financial report data, as of March 31, 2024, TSMC's consolidated revenue for the first quarter was RMB 132.455 billion, a year-on-year increase of 16.5% and a month on month decrease of 5.3%; The net profit was RMB 50.397 billion, a year-on-year increase of 8.9% and a month on month decrease of 5.5%. The operating profit for the first quarter was 55.656 billion yuan, a year-on-year increase of 7.7%, with an estimated 53.834 billion yuan; The gross profit margin for the first quarter is 53.1%, with an estimated 53%. As of the time of publication, TSMC's stock price was at $139.030 per share, a slight decrease of 0.55%.
Advanced manufacturing processes remain TSMC's main source of revenue for this quarter. According to financial report data, the company's 3nm shipments accounted for 9% of total wafer revenue in the first quarter, 5nm accounted for 37%, and 7nm accounted for 19%. Advanced processes (i.e. 7nm and more advanced processes) account for 65% of the total wafer revenue, which is approximately NT $385.22 billion.
It should be noted that in the fourth quarter of 2023, TSMC's 3-nanometer, 5-nanometer, and 7-nanometer processes accounted for 15%, 35%, and 17% of the total wafer revenue, respectively, with advanced processes accounting for 67% of the total wafer revenue. In the third quarter of 2023, TSMC's 3-nanometer, 5-nanometer, and 7-nanometer processes accounted for 6%, 37%, and 16% of the total wafer revenue, respectively. Horizontal comparison reveals that the proportion of the 3-nanometer process to TSMC's total revenue decreased again in the first quarter, with Apple being TSMC's largest customer in this process.
According to the latest research report released by analysis firm IDC, the global smartphone shipment pattern has undergone significant changes in the first quarter of 2024, with iPhone shipments reaching 50.1 million units, a decrease of 9.6% compared to the same period last year, the largest decline among mainstream smartphone brands in the same category.
Morgan Stanley analyst Charlie Chan pointed out in a report on March 7th that TSMC's revenue increased by 9.4% from January to February this year, mainly due to the demand for high-end chips from artificial intelligence, offsetting the potential impact of slowing iPhone sales. According to the news obtained by the First Financial News reporter, benefiting from strong demand from Nvidia's artificial intelligence graphics processors, TSMC's 5nm production capacity utilization rate has reached full capacity.
Various signs indicate that the current demand for artificial intelligence chips has surpassed Apple as the "first driving force" driving advanced process orders from TSMC.
At present, the industry has high expectations for Nvidia GB200 computing cards. TrendForce Consulting estimates that the shipment volume of this product has the opportunity to exceed one million units in 2025, accounting for nearly 40% to 50% of Nvidia's high-end GPUs. Due to the inclusion of GB200, B100, B200 and other components in the Nvidia B series, which will consume more CoWoS production capacity, TSMC has also increased its CoWoS production capacity demand for the entire year of 2024. It is estimated that the monthly production capacity will approach 40000 by the end of the year, which is more than 150% higher than the total production capacity in 2023.
TSMC also responded to market concerns about the 2-nanometer process during the performance briefing. TSMC stated that it expects the company's 2-nanometer process to achieve mass production in 2025 and begin generating considerable revenue by the end of the first quarter of 2026.
At the beginning of this month, many earthquakes occurred in Hualien County, Taiwan, with the largest magnitude of 7.3. TSMC's factory production in Taiwan was once affected. At a performance briefing held on the 18th, TSMC discussed the impact of the earthquake on the company's performance. TSMC stated that this month's earthquake did indeed affect some wafer fabs, and it is expected that most of the lost production will recover in the second quarter.
TSMC is optimistic about its performance in the second quarter, with expected sales of $19.6 billion to $20.4 billion, an expected operating profit margin of 40% to 42%, and a market expectation of 41.3%. The company's business will be supported by 3nm and 5nm chips.
Brady Wang, Deputy Director of Counterpoint Research, pointed out to First Financial Analysis that in the fourth quarter of 2023, TSMC held a leading position in the wafer foundry industry with strong demand for smartphone restocking and artificial intelligence, with a market share of 61%.
"The sustained strong demand for advanced chips, especially those used in the field of artificial intelligence, is a positive signal for TSMC's short-term and long-term performance. The focus on advanced chip research and development, such as shifting towards 3nm technology, is another factor driving TSMC's long-term growth. The support of relevant policies in overseas markets may have a significant impact on the advanced process industry, especially in the production of chips below 10nm," he said.