TSMC, the industry leader in semiconductor foundry services, reported its first-quarter financial results for 2024, with sales reaching $18.87 billion—marginally surpassing the top end of its guidance range of $18.0 to $18.8 billion. This performance indicates robust demand, particularly for high-end manufacturing processes, despite some market observers suggesting potential for even greater results.
For Q2 2024, TSMC anticipates sales to remain steady, projecting figures between $18.0 and $18.8 billion again. A significant portion of the company’s revenue, over 80%, is generated from sales to the smartphone and high-performance computing (HPC) sectors. Notably, while smartphone sales have experienced a seasonal dip post the holiday sales peak, HPC has seen an increase, primarily driven by demand for NVIDIA’s AI processors used in data centers.
TSMC continues to innovate in its process technologies, with notable performance in the 3-5nm process range. However, quarter-on-quarter sales for the 3nm process have seen a decline, attributed to reduced demand from a major client like Apple, which contrasts with Samsung Electronics’ self-sufficient approach in producing its SoCs for the Galaxy series.
An interesting development is TSMC’s cutting-edge packaging technology, CoWoS (Chip on Wafer on Substrate), which has been crucial in mounting NVIDIA GPUs alongside SK Hynix’s High Bandwidth Memory on the same substrate. This technology, though a back-end process, demands high precision and investment akin to front-end processes and is currently a niche area dominated by TSMC, enhancing its sales significantly.
TSMC plans to ramp up its CoWoS production capacity to 28,000 units per month by the end of 2024, emphasizing its capability to meet global AI processor demands. Currently, NVIDIA is a prominent user of CoWoS technology, with other major players like Samsung and Intel not yet achieving mass production in this area.
The company’s geographical sales data shows that about 70% of its shipments are destined for North America, serving major American tech giants such as Apple, NVIDIA, Qualcomm, Broadcom, AMD, and Intel. This underscores the strategic significance of TSMC’s expansion into the U.S., particularly its decision to establish operations in Arizona.
In conclusion, TSMC’s financial performance provides insights into the cutting-edge of semiconductor manufacturing technology, reflecting strong demand concentrated among a select group of high-tech companies, particularly in the AI sector. However, the broader semiconductor market is still stabilizing as TSMC and other industry leaders navigate through ongoing capacity and technological evolutions.
