Taiwan's chipmaker TSMC reports 58 pc jump in profit, warns about Iran war impacts

HONG KONG: Taiwan's chipmaker TSMC, one of the world's largest companies, reported a 58 per cent jump in profit on Thursday for the January-March quarter, thanks to strong demand driven by the artificial intelligence boom, even as the Iran war was driving up costs.

Taiwan Semiconductor Manufacturing Corp., a key supplier for Apple and Nvidia and the largest contract chipmaker in the world, reported a record net quarterly profit of 572.5 billion new Taiwan dollars (USD 18.1 billion) for the first three months of the year, better than analysts had expected.

Profit for the quarter was 58.3 per cent higher compared to the 361.6 billion new Taiwan dollars (USD 11.5 billion) booked in the same period a year earlier. It was also 13.2 per cent higher compared with the previous quarter in October-December.

Revenue increased 8.4 per cent in the January-March period from the previous three months to USD 35.9 billion, the company said. For the current April-June quarter, TSMC expects revenue to further grow to between USD 39 billion and USD 40.2 billion.

As AI-related demand continues to surge, TSMC has been expanding chip fabrication plants in the US, Japan and Taiwan, with a focus on making more advanced 3-nanometre semiconductors that are used in smartphones and AI products.

“AI-related demand continues to be extremely robust,” C.C. Wei, TSMC's CEO and chairman, told an earnings conference on Thursday. “Our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental.”

TSMC also warned of potential impacts from the Iran war, which has not only pushed up global supply chain costs but is also disrupting the world's supply of chemicals and gas, such as helium, essential for chipmaking.

Wendell Huang, TSMC's chief financial officer, said while rising costs stemming from the Iran war could weigh on profitability, the company has “prepared safety stock inventory on hand”, including for helium and is not expecting “any near-term impact" on operations.

TSMC has pledged huge investments in expanding its manufacturing capacity in Taiwan and abroad, including USD 165 billion of commitments in building plants in Arizona. The company said on Thursday its capital spending for the next three years will be “significantly higher” than the past three years as it ramps up capacity to meet customers' growing demand.

The chipmaker had earlier announced plans to raise its capital expenditure budget to USD 52 billion-USD 56 billion for this year from about USD 40 billion in 2025. It said Thursday it now expects capital spending in 2026 to be toward the higher end of that.