Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading chip foundry, will release its first-quarter earnings report for 2024 on Thursday, April 18. However, the timing could not be more tense. On the one hand, major tech firms are working to cement the Nvidia-led rally that has marked the first few months of 2024. On the other, external factors, such as geopolitical instability, threaten to undermine their efforts.
Nevertheless, analysts are forecasting a solid quarter for TSMC, with expectations for a profit of approximately $6.7 billion, up 5% year-over-year, driven by increased demand for chips for artificial intelligence (AI) applications. In addition, the world's largest chip foundry is expected to post earnings per share (EPS) of $1.29, down slightly from $1.31 in 2022.
Beyond the numbers, TSMC investors will also pay close attention to other elements. The company, which held a 61.2% share of the global chip foundry market in the fourth quarter, counts major technology firms such as Apple, Nvidia, and AMD among its key customers. In this regard, traders and analysts will closely watch TSMC's strategic moves, especially its expansion in Arizona, backed by federal grants of up to $6.6 billion. This expansion aims to significantly enhance TSMC's production capabilities, aligning with its strategy to meet the growing demands of AI and other high-tech sectors.
The upcoming earnings report will also provide insights into the revenue contributions from its advanced technology nodes, which are critical to maintaining its industry leadership. Following TSMC's latest quarterly report, the company should continue to focus on its more advanced (smaller) nodes (7nm, 5nm, and 3nm), which currently account for about 67% of its revenue, with the 3nm node alone contributing 15%.
Since its production launch in the third quarter of 2023, the 3nm node has been gaining traction. In the coming quarter, monitoring the revenue share of these newer technologies will be crucial. In addition, it is essential to keep an eye on revenue streams by platform, particularly from high-performance computing (HPC) and smartphones, as these sectors are the largest contributors to the company's financial results.
