TSMC’s Q1 net profit hits new high, gross margin beats forecast

Taipei, April 14 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, on Thursday reported a record high net profit for the first quarter of the year, which is usually a slow season globally in that industry.

TSMC’s first quarter results, released before the start of its investor conference, showed a 22 percent quarterly increase in its first-quarter net profit to NT$202.73 billion (US$6.99 billion), or NT$7.82 per share. The figure also represented a 45.1 percent hike from a year earlier.

The company’s first-quarter gross margin — the difference between revenue and the cost of goods sold — was 55.6 percent, beating its forecast of between 53.0 percent and 55.0 percent.

“The first-quarter earnings per share also surpassed an earlier market estimate of NT$7.3 to NT$7.4,” Mega International Investment Services Corp. analyst Alex Huang noted. “For TSMC, there were no slow season effects at all in the first quarter.”

Globally, the semiconductor industry usually reports a quarterly drop in first-quarter earnings and sales, as it is a slow period in that sector.

For TSMC, however, its consolidated sales rose by a quarterly 11.6 percent in the first quarter to US$17.57 billion, beating its previous guidance of US$16.6 billion to US$17.2 billion. The first quarter revenue also rose 36 percent from a year earlier.

“Strong global demand for emerging technologies led to full capacity utilization at TSMC,” Huang said. “In addition, the chipmaker benefited from a weaker Taiwan dollar in the first quarter, as it converted its sales into the local currency.”

The company’s sales forecast in mid-January was based on an exchange rate of NT$27.6 against the U.S. dollar, but the rate fell to NT$28.622 at the end of March.

According to TSMC, its sales of chips for high performance computing devices and automotive electronics rose by a quarterly 26 percent in the first three months of the year, while sales of chips for consumer electronics grew 8 percent, and those for Internet of Things gadgets increased 5 percent.

Sales of smartphone chips, however, rose only 1 percent from the previous quarter, amid a slowdown in demand for smartphones, the company reported.

Chips on TMSC’s advanced 7 nanometer and 5nm processes accounted for 30 percent and 20 percent of its first-quarter sales, respectively, compared with 27 percent and 23 percent in the previous quarter, the company said.

The 5nm process is TSMC’s latest technology in commercial production, and its 3nm process is scheduled to go into mass production in the second half of this year, while the company is developing the 2nm process.

In the first quarter, TSMC’s operating margin — the difference between sales, the cost of goods sold and operating expenses — stood at 45.6 percent, topping its forecast of 42.0 percent to 44.0 percent, according to the report.