Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) stock fell 3.09% (As on Apr 15, 7:59:35 AM UTC-4, Source: Google Finance) though the company forecast an up to 37% jump in current-quarter sales and said it expects chip capacity to remain very tight this year, amid a global crunch that has kept order books full and allowed chipmakers to charge premium prices. TSMC is working to address supply chain challenges with tool suppliers to help them expand capacity, referring to a cycle of shortages where makers of chip equipment are struggling to find the chips needed for equipment to supply chipmakers like TSMC.
TSM in the first quarter of FY 22 has reported 45% rise in the Profits to NT$202.73 billion ($6.99 billion), aided by a boom in semiconductor sales from high product demand. Analysts expected a profit of T$184.67 billion, according to Refinitiv. In the first quarter, consolidated sales climbed by a quarterly 11.6% to $17.57 billion, exceeding previous guidance of between $16.6 billion and $17.2 billion. TSMC’s net profits for Q1 beat out analysts’ expectations of T$184.67 billion. In addition, the results also mark a 22% increase from the preceding quarter. Additionally, the Taiwanese chip giant’s first-quarter gross margin was 55.6%, which also surpassed its own forecast of between 53% and 55%.
For the second quarter, the chipmaker expects revenue of between $17.6 billion and $18.2 billion, with gross profit margin likely to be between 56% and 58%. TSMC defines advanced node as 7 nanometre and more advanced technologies, chips that account for half its revenue. He added that the company did not expect any impact to its capacity plan this year.
The company, which has already lifted capital spending for this year to keep up with the surge in demand, said a 36% jump in first-quarter revenue was supported by better-than-expected demand from smartphone customers and high performance computing (HPC) chips, as well as strong demand for auto related chips. The company expects HPC to be the strongest growing business in this year and in the following years. Revenue from TSMC’s smartphone business, which sells to Apple, ticked up 1% from the previous quarter in a typically soft season for the product.
TSMC expects chip demand to continue in the long term, Wei said, calling it a “mega-trend” in the industry supported by demand for HPC chips for 5G and artificial intelligence, as well as an increase in chips used in gadgets.
The shortage has forced automakers and electronics manufacturers to cut production.