AI chip demand support! Taiwan Semiconductor Q4 revenue exceeds expectations, on par with historical highs

Under the boost of AI chip demand, Taiwan Semiconductor's revenue in the fourth quarter of 2023 exceeded expectations, reaching a record high on par with the same period last year.

On January 10th, Taiwan Semiconductor announced that its revenue in December 2023 was NT$176.3 billion (approximately US$5.7 billion), a year-on-year decrease of 8.4%. The revenue for the fourth quarter reached NT$625.5 billion (approximately US$20.08 billion), surpassing analysts' expectations of NT$616.2 billion (approximately US$19.7 billion), and remained flat compared to the same period last year.

For the full year of 2023, Taiwan Semiconductor achieved revenue of NT$2.16 trillion (approximately US$69.38 billion), a year-on-year decline of 4.5%.

Media analysis pointed out that Taiwan Semiconductor's revenue in the fourth quarter exceeded expectations, mainly due to the demand for chips in AI development, which partially offset the decline in demand for chips in consumer electronics such as smartphones and laptops.

Taiwan Semiconductor's chip production capacity almost holds the fate of all mainstream AI chip manufacturers, making it a major beneficiary of the AI wave brought by ChatGPT: including NVIDIA's H100 and H800 using 4nm process, A100 and A800 using 7nm process, AMD's M1200 using 6nm process, and M1300 using 5nm process; some products from Xilinx and Intel are also manufactured by Taiwan Semiconductor.

Therefore, analysts pointed out that Taiwan Semiconductor's technological iteration speed is a key factor in the development of the AI chip industry. Taiwan Semiconductor previously stated that even in the face of a sluggish global economy, companies are eager to build their own AI tools. Taiwan Semiconductor is expected to return to a growth trajectory in 2024, with revenue challenging NT$2.5 trillion.

President of Taiwan Semiconductor, Wei Zhejia, mentioned at a supply chain management forum in December last year that there is still uncertainty in 2024 due to external factors such as inflation and rising costs. However, benefiting from the rapid development of AI applications, 2024 will also be a year full of opportunities. In addition, Taiwan Semiconductor has already announced at an earnings conference in October last year that the demand for 3nm is better than three months ago, which will help the company achieve healthy growth in 2024.According to corporate analysis, Taiwan Semiconductor is expected to benefit from the growth of major customer applications such as Apple, Nvidia, AMD, and others, particularly the increase in global production value of graphics processors (GPUs) will be the biggest driving force. At the same time, the diverse development of custom artificial intelligence accelerators and application-specific integrated circuits (ASICs) will also drive operations. Research firm Dell'Oro estimates that global GPU production value will grow by 70% annually by 2024.

The booming demand for AI chips has driven the rise in Taiwan Semiconductor's stock price, which soared over 25% in 2023.