Investing.com — Taiwan Semiconductor Manufacturing Corporation (TW:) (NYSE:), abbreviated as TSMC, on Wednesday beat expectations as the world's largest contract chipmaker benefits from increased demand for rapidly growing engineered semiconductor manufacturing equipment. The company recorded a profit in the first quarter. intelligence industry.
TSMC's net profit for the three months ended March 31 rose to NT$225.49 billion, beating Reuters' forecast of NT$218.1 billion ($6.7 billion). This figure significantly exceeded last year's net profit of NT$206.99 billion.
Diluted earnings per share for the first quarter were NT$8.70, or $1.38 per American Depositary Receipt, compared to $1.31 in the same period last year.
But net profit fell 5.5% on a quarterly basis, suggesting demand may have cooled slightly from its 2023 highs.
TSMC was also taking on increased costs to fund increased chip development. Capital expenditures for the first quarter of 2024 increased to $5.77 billion from $5.24 billion in the previous quarter.
Sales in the first quarter increased by 16.5% to NT$592.64 billion. Given that TSMC will continue to struggle with weak semiconductor demand in 2023, the strong year-over-year increase was driven in part by a lower standard of comparison.
TSMC also benefited from the weaker Taiwan dollar throughout the first quarter, boosting dollar revenue.
Profits increased on the back of increasing demand for chips from the AI industry. Given that TSMC plays a pivotal role in the chip manufacturing industry, TSMC's earnings are primarily seen as a bellwether of global chip demand.
The company is the world's largest contract chip maker, with customers including leading technology companies such as Nvidia (NASDAQ:) and Apple (NASDAQ:).
Nvdia in particular is an important source of demand for TSMC as it produces some of the most advanced AI chips currently available on the market.
To this end, TSMC's valuation primarily reflects Nvidia's astronomical rise over the past year.
