Apple, Nvidia Chip Supplier TSMC's Shares Spike On Upbeat Q1 Earnings

Taiwan Semiconductor Manufacturing Company Limited TSM reported forecast-beating, record first-quarter results, citing strong demand trends in the high-performance computing and automotive segments. The company guided to in-line second-quarter revenues and further margin expansion.

The stellar performance comes despite the supply chain challenges and input cost inflationary environment.

What Happened: TSMC's first-quarter net income climbed 45.1% year-over-year to NT202.73 billion ($7 billion). The net income was up 22% from the previous quarter.

Earnings per share came in at NT$7.82 or $1.40 per ADS, exceeding the consensus estimate of $1.33, according to Benzinga Pro.

The Taiwanese foundry confirmed the top-line number it reported last week. First-quarter net revenue climbed 35.5% year-over-year to NT$491.08 billion ($16.95 billion). On a quarter-over-quarter, the increase was 11.6%.

Related Link: Apple Chip Supplier TSMC's Market-Cap Leapfrogs Above High-Profile Chinese Tech Stalwarts Tencent, Alibaba

TSMC manufactures chips that go into different applications and products. The company counts Apple, Inc. AAPL, Advanced Micro Devices, Inc. AMD, Nvidia Corporation NVDA and Qualcomm, Inc. QCOM among its customers.

The company noted that 5-nanometer process node accounted for 20% of the total first-quarter wafer revenue and 7-nm made up 30% of the total.

Gross margin came in at 55.6%, a 2.9%-point expansion from the previous quarter. The metric also exceeded the company's guidance range of 53-55%.

"Our first quarter business was supported by strong HPC and Automotive-related demand," said Wendell Huang, VP and chief financial officer of TSMC.

What's Next: TSMC forecasts strong demand trends for the second quarter, underpinned by HPC and automotive demand.

The company expects second-quarter revenue of $17.6 billion to $18.2 billion, surrounding the consensus estimate of $18 billion. Gross and operating margins are expected in the range of 56-58% and 45-47%, respectively.

Price Action: The U.S.-listed ADRs of TSMC closed Wednesday's session up 4.17% at $101.50.

Related Link: Apple Supplier TSMC Plans To Build Advanced Chip Packaging Plant In US: Report

Photo: Courtesy of TSMC