TSMC's First-Quarter Profit Gains on Booming Demand for AI Chips

$Taiwan Semiconductor Manufacturing(TSM)$   posted higher first-quarter profit, ending three straight quarters of declines, thanks to a surge in demand for advanced chips amid the global boom in artificial intelligence.

$Taiwan Semiconductor Manufacturing(TSM)$  , which makes chips for the likes of $Apple(AAPL)$   and $NVIDIA Corp(NVDA)$  , said Thursday that net profit rose 8.9% from a year earlier to 225.49 billion new Taiwan dollars ($6.96 billion) in the first quarter. That exceeded the estimate of NT215.40 billion in a poll of analysts by FactSet.

First-quarter revenue rose 16.5% on year to NT$592.64 billion after its March revenue increased 34% on year.

TSMC's operating profit margin reached 42.0% in the first quarter, down 3.5 percentage points from a year earlier.

The chipmaker's outlook has brightened recently, coming after an industry-wide inventory glut punished chip makers in 2023.

TSMC is benefiting from a smartphone market that has started to expand again, and from the sudden surge in demand from generative artificial intelligence, stoking demand for its prowess in manufacturing cutting-edge chips.

TSMC said first-quarter revenue from its high-performance computing segment, which includes AI chips, rose about 3% on quarter, while revenue from smartphones fell 16% and revenue from its Internet of Things segment rose 5%.

TSMC said revenue from customers in North America accounted for 69% of the total revenue, down from 72% in the fourth quarter.

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