Taiwan Semiconductor betting on AI in 2024

The Taiwan Semiconductor Manufacturing Co. (TSMC) is betting 2024 will look better than last year.

Though everyone was buzzing about AI in 2023, it was still a “challenging year for the global semiconductor industry,” as vice chairman and CEO C.C. Wei noted during an earnings call. High inflation and interest rates and a weaker global economy affected inventory levels, he said. As CNBC reported, when pandemic-era demand for consumer electronics ebbed, chipmakers were left with a glut of inventory.

TSMC, the biggest contract chipmaker in the world, saw revenue decline 8.7%, measured in US dollars, over 2023. Its net profit and diluted EPS in Q4 were both 19.3% lower than they were in Q4 2022.

But compared with the previous quarter, the company appears to be on an upswing. Its net income rose 13.1% from Q3 2023, and its revenue jumped 14.4%.

TSMC’s fourth-quarter results were “supported by the continued strong ramp of our industry-leading 3-nanometer technology,” CFO Wendell Huang said. 3-nanometer chips, which are more advanced than the 5- and 7-nanometer chips the company also makes, comprised 15% of wafer revenue (a wafer is a component of a semiconductor) in Q4. The company anticipates that revenue from the 3-nanometer chips will “more than triple in 2024,” Wei said.

TSMC foresees its revenue will “increase by low to mid 20%” in 2024, due to “robust AI-related demand” as well as growing demand for its 3- and 5-nanometer chips, Wei said. The company’s stock rose around 6% following the announcement.