Recently Baird’s Tristan Gerra downgraded Nvidia from outperform to neutral slowdown in the consumer GPU demand. Subsequently, we also saw the downward trends in NVDA stock price. So is the whole semiconductor industry entering the winter?
Taiwan Semiconductor Manufacturing Co Ltd ($Taiwan Semiconductor Manufacturing(TSM)$,TSMC) as a leading foundry has released its Q1 report. The numbers are fantastic.
Year-over-year, first quarter revenue increased 35.5% while net income and diluted EPS both
increased 45.1%. Compared to fourth quarter 2021, first quarter results represented a 12.1%
increase in revenue and a 22.0% increase in net income. Gross margin for the quarter was 55.6%, operating margin was 45.6%, and net profit margin was 41.3%.
From revenue contribution by platform, all 6 platforms increased in the first quarter. Smartphone increased 1% quarter-over-quarter to account for 40% of our first quarter revenue. HPC (high performance computing) increased 26% to account for 41%. IoT increased 5% to account for 8%. Automotive increased 26% to account for 5%. And DCE increased 8% to account for 3%.
The management has commented “Our first quarter business was supported by strong HPC and Automotive-related demand. Moving into second quarter 2022, we expect our business to continue to be supported by HPC and Automotive-related demand, partially offset by smartphone seasonality.”
The CEO further said: “On the inventory front, we expect the supply chain to continue to maintain a higher level of inventory as compared to the historical seasonal level for a longer period of time, prolonged by recent COVID-related supply chain disruptions and uncertainties brought about by
geopolitical tension. On the demand side, despite the recent macro-related uncertainties, we continue to observe the structural increase in long-term semiconductor demand, underpinned by the industry's megatrend of 5G and HPC-related applications. In MCU or the power managed IC side, we still see very strong demand. The demand is more specific to those industrial automotive industry.”
The management predicted the whole industry, semiconductor's foundry industry will be growing around 20% year-over-year.
Lastly, TSMC's capacity will be very tight, not enough to support their customers.
The advanced technologies, which are defined as 7-nanometer and below, accounted for 50% of TSMC wafer revenue. With N3 coming up, which will be driven by both HPC and smartphone applications, TSMC will definitely get benefits from the megatrends. I think we should also keep an eye on the companies in field related to HPC like data centers, cloud computing, AI and autonomous vehicles in light of recent weakness of many semiconductor stocks.
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