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TSMC’s profit is expected to rise 5% in the first quarter thanks to strong demand for AI chips

By Ben Blanchard and Faith Hung

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co, the dominant maker of advanced chips used in artificial intelligence applications, is expected to report a 5% first-quarter profit rise on Thursday on strong demand.

The world’s largest contract chipmaker, whose customers include Apple and Nvidia, has benefited from a surge toward AI, which has helped the company weather the pandemic-induced decline in demand for electronics and boosted shares of pushed TSMC to an all-time high.

TSMC is expected to report net profit of T$217.2 billion ($6.71 billion) for the quarter ended March 31, according to an LSEG SmartEstimate of 22 analysts. SmartEstimates give more weight to analyst forecasts that are more consistently accurate.

That compares with first-quarter net profit of T$206.9 billion last year.

TSMC last week reported a 16.5% increase in first-quarter revenue, beating market expectations and at the high end of the company’s own expectations.

Eric Yao, vice president at Taiwan’s Eastspring Investments, which manages about T$90 billion in client assets in Taiwanese stocks, said the $6.6 billion in U.S. subsidies for TSMC’s new factories in Arizona boded well for its prospects to maintain the lead in advanced process technologies.

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“TSMC will likely continue to lead on that front, and Intel and Samsung won’t have much chance to catch up,” he said, referring to two rivals looking to challenge the company’s dominance.

Intel this month announced widening operating losses for its foundry business, a blow to the chipmaker as it tries to regain a technological edge it has lost in recent years to TSMC, which also announced last week it would build a third factory in Arizona.

Analysts at Fubon Securities said they expected TSMC to revise its outlook for AI demand in the coming years.

“TSMC previously indicated that AI could account for a large portion of its revenue by 2026, but based on our calculation we believe the target could be achieved earlier in 2025.”

The rise of AI has helped boost the price of shares in Asia’s most valuable company. TSMC’s Taipei-listed shares are up 36% so far this year to an all-time high, compared with a 14% gain for the broader market.

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TSMC will hold an earnings call at 6am GMT on Thursday.

($1 = 32.3890 Taiwan dollars)

(Reporting by Ben Blanchard and Faith Hung; Editing by Jamie Freed)

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