TSMC (TSM) earnings beat revenue and EPS estimates – but is demand cooling?

Today, one of this earnings season’s most eagerly anticipated companies released their latest financial results.

The Taiwan Semiconductor Manufacturing Company (TWSE: 2330, NYSE: TSM) reported its Q1 results for 2024 on April 18th, during the Taiwanese afternoon.

The company announced net income of NT$225.49 billion (approximately $6.98 billion),

Earnings

In terms of earnings, the company announced diluted earnings per share of NT$8.70 (or $1.38 per ADR unit) for the first quarter ended March 31, 2024.

This was up from an EPS of $1.31 last year.

Revenue and net income

Year-over-year, first quarter revenue increased 16.5% while net income and diluted EPS both increased 8.9%.

However, compared to fourth quarter 2023, first quarter results represented a 5.3% decrease in revenue and a 5.5% decrease in net income.

Gross margin for the quarter was 53.1%, operating margin was 42.0%, and net profit margin was 38.0%.

TSM investor relations: beating expectations?

For many, the TSMC earnings are a reflection of how well investors fervour for all things AI-related will translate into the 2024 financial year.

Expectations were high ahead of the earnings. Reuters expected profits to rise by 5% for the quarter, while Bloomberg expected the company to raise its revenue expectations and forecasts.

While TSMC beat expectations for a Q1 performance, it failed to scale the same heights that its Q4 2023 earnings did. Does this mean that demand for the super-stock may be cooling?

Implications for global chipmaking

Nevertheless, the earnings did represent a plausible bellwether for global chip demand – and this seems to be healthy, according to today’s statement.

In the first quarter, TSMC said that shipments of 3-nanometer accounted for 9% of total wafer revenue; 5-nanometer accounted for 37%; 7-nanometer accounted for 19%. Advanced technologies, defined as 7- nanometer and more advanced technologies, accounted for 65% of total wafer revenue.

Compared with Q1 of 2023, this was a significant increase. During Q1 of 2023, 5-nanometer process technology contributed 31% of wafer revenue in the first quarter, while 7-nanometer accounted for 20%. Advanced Technologies, defined as 7-nanometer and below, accounted for 51% of wafer revenue.