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TSMC Profits From AI Boom, Beats Earnings Estimates

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Moomoo News Apr 18, 2024 15:42 · 20.4k Views

TSMC posted its first profit rise in a year. The main chipmaker to Apple and Nvidia recorded a 9% rise in net income to NT$225.5 billion ($7 billion) in the first three months of the year. Bloomberg Intelligence's Robert Lea breaks down the situation.

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Transcript

  • 00:00 The world's biggest chip maker, of course.
  • 00:01 TSMC reporting
  • 00:03 a beat on first quarter net income in firms is the first profit rise in fact
  • 00:08 in in a year for TSMC.
  • 00:10 Let's bring in our senior analyst at Bloomberg Intelligence.
  • 00:12 Then to break down the numbers we've seen from TSMC, Robert Lee, who's standing by for us in Hong Kong.
  • 00:15 Robert, what stands out to you at this point?
  • 00:19 OK,
  • 00:20 thanks for the intro.
  • 00:21 You've already run through the numbers.
  • 00:22 So as you've said,
  • 00:24 they seem on the face of it a decent beat
  • 00:27 roughly just under 5% beat at the net income level, roughly around 1% beat at the operating level.
  • 00:33 So that will give the market some encouragement that the the company's returning to growth
  • 00:38 after a somewhat difficult 2023.
  • 00:41 However, there are some potential question marks on the horizon.
  • 00:45 I think yourself and your viewers well aware about the weakness that Apple is seeing within the China smartphone business at the moment
  • 00:52 and by our estimations Apple accounts for between 20 to 25% of T SMC's revenue.
  • 00:58 That's one thing and very quickly overnight we saw the OR from an Asian perspective we saw ASML results,
  • 01:05 they were great, but their order intake on these key
  • 01:08 you know bleeding edge EUV machines was weakened and expected.
  • 01:12 I think that has no impact on TSMC for the next couple of quarters, but it does raise a little?
  • 01:17 About the demand
  • 01:19 into the tail end of this year and into 2025.
  • 01:22 But the key thing for TSMC stock as you said in your intro is what's the CapEx outlook?
  • 01:27 We don't know that yet.
  • 01:28 We're here on the call later on.
  • 01:29 And more importantly, what's the guidance for the next quarter and the year as a whole.
  • 01:33 Again, we'll have to wait and see on that front, see what the management say,
  • 01:37 OK.
  • 01:37 So we look to the near term in terms of the call and then you're pushing all the way out to 2025 brilliant analysis.
  • 01:42 Rob, give us a quick view though on the second quarter
  • 01:44 and how the rest of the year is, is shaping up for TSMC.
  • 01:49 Well, yeah, OK.
  • 01:50 Apologies for the dull answer, but it's all AI, AI, AI and a bit of NVIDIA mixed in there.
  • 01:55 So I think the near term outlook does look good.
  • 01:57 But again, just taking a step back here,
  • 02:01 14% or so of the company's revenue comes from the automotive sector.
  • 02:05 We've seen incremental weakness coming in on the EV side.
  • 02:08 So I think that's one thing people need to keep an eye on.
  • 02:11 Smartphones, again I've already mentioned about Apple, which is their largest single customer.
  • 02:15 So again there are some question marks there.
  • 02:17 So I think the
  • 02:19 if we're going to see incremental upside to earnings estimates and potentially the share price, the upside in AI needs to outweigh potential weakness elsewhere.
  • 02:28 One last thing, we we had this unfortunate earthquake recently.
  • 02:32 Luckily the loss of life was fairly minimal, but there was some disruption to TSM CS business.
  • 02:37 I think there's a question mark whether there is a near term margin here into Q2.
  • 02:41 But again we'll we'll wait to see what the management have to say later on.