Shares of Taiwan Semiconductor (TSM) are rising after the company reported that its sales rose nearly 60% year-on-year. Yahoo Finance's Dan Howley joins him on The Morning Brief to talk about the company's position in the AI chip race.
Rising demand for chips made for artificial intelligence was the main driver of Taiwan Semiconductor's sales last quarter. The company also produces chips for smartphones, but AI chips have taken the lead as demand has slumped.
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This post was written by Melanie Leal
video transcript
Shift to chip field.
Taiwanese cicada stocks rose following reports that sales in April increased by nearly 60% compared to the same month last year.
Can Yahoo FINANCE's Dan Howley tell us more about that?
That is correct.
This was an increase of 59.6% compared to the previous year.
That's better than any month so far this year, but it's only May and, uh, that's a huge increase.
And I think the real reason for this is clear.
That's because, you know, the AI craze is forcing everyone to buy chips, or request to create or build chips.
You know, things like NVIDIA and MD and others and a bit of a regression in the smartphone market was that huge drop that we saw.
Um, now we're, uh, starting to see it start to recover.
Oh, and that will drive TSNC sales.
Because, uh, a lot of those chips are manufactured in, uh, TSM CS facilities.
So, uh, we're seeing demand for, uh, AI coming together to, uh, drive the company's revenue, uh, much higher than last month.
Well, it all depends on where the smartphone market actually goes.
Will it be a big leap forward?
Huh, is there a demand for it?
Will it be an overall improvement or will it be a struggle to get back on track?
So, um, I think that's going to be one of the main things to look at.
But on the other hand, the AI aspect will continue to drive a lot of demand and sales, especially for more expensive and advanced chips.
And about TS MC.
So the company continues to see and hope to see what the 50% margin will be in the foundry business.
Well, they would assume that there are no competitors entering the market.
However, more competitors will enter this market.
Intel.
Scaling up takes time.
I've heard that by 2030, foundry business profit margins will reach 40%.
So, what is the lead time for TS MC?
Yet believing is built into this business.
And investors continue to expect such results.
Yeah.
So there are two things.
We have a foundry business.
And, uh, we have the ability to manufacture very high-end chips.
Well, Intel is trying to develop very high-end chips.
They're just getting there when it comes to foundry business, but yeah, you're right.
It takes quite a while before they get up and sniff.
They're still going to continue to primarily produce Intel chips, uh, in the near future, uh, until more chips start being produced.
Well, customer.
There are now customers lining up.
One of the major companies they own is Microsoft.
They intend to develop their own chips.
Well, Intel has a roadmap.
That's very impressive.
It's just running it right now.
Is this the case with TS MC as well?
yes.
That means there is competition, but as you alluded to, it's pretty far off at the moment.
Well, you know, they're still the world's largest manufacturer of processors.
There's great context there.
Yahoo Finance's own Dan Howie Day.
And it's a pleasure to be here with you this morning.
thanks so much.
