TAIWAN Semiconductor Manufacturing Company (TSMC) posted its first profit rise in a year, after strong artificial intelligence (AI) demand revived growth at the world’s biggest contract chipmaker.

The main chipmaker to Apple and Nvidia recorded a 9 per cent rise in net income to NT$225.5 billion (S$9.5 billion) in the first three months of the year, surpassing an average analyst estimate of NT$214.9 billion.

Taiwan’s largest company last week disclosed its fastest sales growth since 2022, suggesting demand for the chips that accelerate AI development is beginning to offset the fallout from a smartphone market slump.

Apple, which accounted for about a quarter of its revenue in 2023, started the year with a deep decline in Chinese iPhone sales.

TSMC has gained about US$340 billion of market value since an October 2022 trough, riding bets it will become one of the clearest winners of a global boom in AI development. The company set a 2024 capital expenditure budget of US$28 billion to US$32 billion at the start of the year.

It said in January that it expects revenue to grow by at least 20 per cent this year as the broader semiconductor market recovers, though uncertainty persists given global macroeconomic volatility.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Key supplier ASML Holding – the sole provider of the world’s most advanced chipmaking machines – reported a 22 per cent miss on first-quarter bookings on Wednesday (Apr 17). Longer term, investors expect AI-focused chips to gradually take up a larger proportion of revenue. TSMC’s AI revenue is growing at a rate of 50 per cent annually, the company said in January.

Still, some investors have warned that the current level of AI chip demand is unsustainable over the long run. Others remain wary given the uncertainty hanging over the Taiwan Strait, the narrow body of water between China and an island it views as part of its territory. BLOOMBERG