5 Major Takeaways from TSMC Impressive Q1 FY24 Results

Introduction

Taiwan Semiconductor Manufacturing Company (TSMC) has once again showcased its resilience and strength in the semiconductor industry, as evidenced by its stellar performance in the first quarter of fiscal year 2024. Let’s delve into the numbers and key highlights of TSMC’s Q1 FY24 financial report.

1. Revenue Growth and Beat:

TSMC’s revenue surged by a remarkable 17% year-over-year (Y/Y), reaching an impressive $18.9 billion in Q1 FY24.

This exceeded expectations, with a slight beat of $0.3 billion. The significant revenue growth reflects TSMC’s continued dominance in the semiconductor market and its ability to meet the escalating demand for advanced chips across various sectors.

AI Chip Boom: This growth was driven by robust demand for advanced AI chips, particularly those used in artificial intelligence applications and large language models.

High-Performance Computing (HPC): Continued demand for chips used in HPC applications like data centers further fueled TSMC’s performance.

2. Margin Analysis:

While revenue soared, TSMC witnessed a slight decline in gross margin and operating margin compared to the previous year.

The gross margin stood at 53%, down by 3 percentage points (pp) Y/Y, while the operating margin was 42%, also down by 3 pp Y/Y.

Despite these marginal decreases, TSMC’s margins remain robust, underscoring its efficient operations and cost management strategies.

3. Capital Expenditure:

Investing in cutting-edge technologies and expanding production capacity is vital for TSMC to maintain its competitive edge.

In Q1 FY24, TSMC allocated $5.8 billion towards capital expenditure (Capex), reaffirming its commitment to innovation and growth.

This substantial investment underscores TSMC’s proactive approach to address the burgeoning demand for semiconductor chips worldwide.

Meeting Demand: To address the chip shortage and capitalize on the high demand, TSMC confirmed that its ambitious capacity expansion plans are progressing as scheduled.

Future-Proofing: This expansion will allow them to manufacture more chips and cater to the ever-growing need, potentially easing supply chain constraints in the long run.

4. Earnings per Advanced Depository Receipt (EPADR):

TSMC’s earnings per advanced depository receipt (EPADR) also exceeded expectations, coming in at $1.38, surpassing estimates by $0.06.

This robust earnings performance reflects TSMC’s ability to generate value for its shareholders amidst a rapidly evolving technological landscape.

5. Technology Node Contribution:

A noteworthy aspect of TSMC’s Q1 FY24 performance is the contribution of its advanced technology nodes.

The 3nm and 5nm process nodes accounted for 9% and 37% of TSMC’s total revenue, respectively.

This underscores the growing significance of advanced nodes in TSMC’s revenue mix, highlighting the company’s leadership in cutting-edge semiconductor manufacturing.

Conclusion:

TSMC’s stellar performance in Q1 FY24 reaffirms its position as a global semiconductor powerhouse.

Despite facing challenges such as supply chain disruptions and geopolitical tensions, TSMC has demonstrated resilience and agility, delivering strong financial results and maintaining its technological leadership.

With robust revenue growth, strategic investments, and a focus on innovation, TSMC is poised to capitalize on the opportunities presented by the rapidly evolving semiconductor landscape.

As TSMC continues to push the boundaries of semiconductor technology, investors and industry observers alike can look forward to further milestones and achievements from this trailblazing company.