Taiwan Semiconductor Reports a Q1 Beat Due to Strong AI Demand

Taiwan Semiconductor Manufacturing (NYSE:TSM), the world's leading contract chipmaker, reported a robust profit for the first quarter, surpassing expectations due to rising demand from the burgeoning artificial intelligence sector.

TSMC announced a net income of T$225.49 billion for the quarter ending March 31, exceeding Wall Street projections of T$218.1 billion ($6.7 billion) and marking an increase from last year's T$206.99 billion. Earnings per share for the quarter were T$8.70, or $1.38 per American Depository Receipt, up from $1.31 the previous year.

However, the quarterly comparison showed a 5.5% drop in net income, suggesting a slight cooling in demand compared to the peak levels of 2023. The company is also facing rising costs as it ramps up investments in chip development, with capital expenditures climbing to $5.77 billion in the first quarter from $5.24 billion in the previous quarter.

Revenue for the quarter grew 16.5% year-on-year to T$592.64 billion, aided partly by a weak Taiwan dollar which enhanced dollar-denominated earnings.

This financial performance is particularly noteworthy as TSMC's results are often viewed as a barometer for global chip demand due to its critical position in the semiconductor industry.