TSMC April Sales Soar 60% to $7.3B, AI Demand Spurs Growth

Key Takeaway

• TSMC reports a 60% sales increase in April to NT$236 billion ($7.3 billion), driven by high demand for AI chips and recovery in consumer electronics.
• Nvidia's 210% share price surge boosts global semiconductor and cryptocurrency markets, highlighting the sector's growth amid an "AI super cycle."
• Nvidia's upcoming earnings on May 22 are highly anticipated, influencing global tech markets and overshadowing recent underperformances by Chinese tech giants.

AI Demand Fuels TSMC Growth

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reported a significant 60% increase in April sales, reaching NT$236 billion ($7.3 billion). This surge is attributed to the sustained demand for artificial intelligence (AI) semiconductors, coupled with the early signs of recovery in the consumer electronics sector. TSMC's revenue growth accelerated to 34.3% in March, driven largely by the global appetite for AI chips. The company is now poised to see its sales increase by about a third in the current quarter.

TSMC has managed to navigate through a period of muted demand for personal electronics, with Nvidia Corp.’s highly sought-after AI chips playing a crucial role in bolstering sales. The company's CEO, C.C. Wei, has expressed cautious optimism about the pace of recovery in consumer demand. TSMC's shares reached an all-time high in April, benefiting from its exclusive partnership with Nvidia for manufacturing the most advanced training chips, as well as its relationships with other tech giants like Apple Inc. and Advanced Micro Devices Inc.

European and Cryptocurrency Markets Rally

The global semiconductor and cryptocurrency markets have experienced notable rallies, largely influenced by Nvidia's 210% surge in share price. European semiconductor stocks such as ASML, VAT Group, ASM International, and BE Semiconductor Industries have seen gains ranging from 40% to 85%, demonstrating a positive correlation with Nvidia's performance. This trend underscores the semiconductor industry's integral role in the burgeoning AI sector.

Furthermore, AI-focused cryptocurrency tokens, including RNDR, AGIX, TAO, and FET, have outperformed the broader market and Bitcoin, rallying alongside Nvidia's shares. This surge in AI tokens and Nvidia's market influence reflects the growing optimism and anticipation of an "AI super cycle," driven by advancements in AI technology and the launch of new AI applications like OpenAI's ChatGPT.

Nvidia's Earnings and Global Tech Influence

Nvidia's upcoming earnings report on May 22 is highly anticipated, with the potential to overshadow the underwhelming March-quarter results from Chinese tech giants like Tencent, Alibaba, and JD.com. The global tech market, particularly in regions such as Hong Kong, South Korea, and Taiwan, is closely watching Nvidia's performance, given its pivotal role in the AI narrative. Despite the challenges faced by China's tech sector, which missed earnings expectations by 8%, the focus remains on AI and its transformative potential across various industries.

The technology sector, especially companies involved in AI like Palantir Technologies Inc. and NVIDIA Corp., continues to attract investor attention. Palantir's recent report of a 21% year-over-year revenue increase highlights the sector's growth potential, despite concerns over future expansion and growth deceleration.

Management Quotes

• C.C. Wei, CEO of TSMC:

  "TSMC Chief Executive Officer C.C. Wei has cautioned about the pace of any recovery."