Taiwanese semiconductor manufacturing (TSM), the world’s largest contract chipmaker, beat first-quarter expectations on Thursday. But TSM stock fell in early trading.
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The chip foundry, better known as TSMC, earned $1.38 per U.S. share on revenue of $18.87 billion in the March quarter. Analysts polled by FactSet expected earnings of $1.30 per share on revenue of $18.31 billion. In the same period last year, TSMC earned $1.30 per U.S. share on revenue of $16.62 billion.
With its Q1 report, TSMC returned to revenue and profit growth after four consecutive quarters of year-over-year declines. Taiwan Semiconductor’s revenue rose 12.9%, while profit rose 6.2%.
For the current quarter, TSMC expects revenue of $19.6 billion to $20.4 billion. The $20 billion midpoint exceeded Wall Street’s target of $19.44 billion. In the second quarter of last year, TSMC generated revenue of $15.47 billion.
TSM shares fall after report
In premarket trading on the stock market today, TSM stock fell 2.2% to 136.
TSMC’s customers include: Apple (AAPL), AMD (AMD), Nvidia (NVDA), Qualcomm (QCOM) and more.
“Our first quarter business was impacted by smartphone seasonality, partially offset by continued demand for high-performance computing (HPC),” Chief Financial Officer Wendell Huang said in a press release.
He added: “As we enter the second quarter of 2024, we expect our business to be supported by strong demand for our leading 3-nanometer and 5-nanometer technologies, partially offset by the continued seasonality of smartphones. ”
Circuit widths on chips are measured in nanometers, which is one billionth of a meter.
TSM stock has recently made a breakthrough
In the first quarter, shipments of 3-nanometer chips accounted for 9% of total wafer revenues, 5-nanometer 37% and 7-nanometer 19%. Advanced technologies, defined as 7-nanometer and smaller nodes, accounted for 65% of total wafer revenues.
TSMC slightly lowered growth expectations for the sector but maintained its business target, Barclays analyst Simon Coles said in a client note. The company reiterated its expectations for revenue growth in the low-to-mid 20% range, he said.
“AI remains the bright spot” for Taiwan Semiconductor as the company sees a gradual recovery in most of its end markets this year, Coles said. He rates TSM stock as Overweight with a price target of 145.
On January 18, TSM stock broke out of the cup-with-handle base at a buy point of 105.52, according to IBD MarketSurge charts. The breakout occurred after TSMC delivered a fourth-quarter beat-and-raise report.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer tech, software and semiconductor stocks.
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