Investing.com-- Taiwan Semiconductor Manufacturing Co (TW:2330) (NYSE:TSM), the world’s largest contract chipmaker, logged a smaller-than-expected decline in its fourth-quarter profit as revenue was buoyed by increased sales of its most advanced chips.
Profit for the three months to December 31 fell to T$238.7 billion from T$295.9 billion a year ago. On a per-share basis, profit fell to T$9.21, but still beat Investing.com estimates of T$8.67.
Revenue was T$625.5 billion, remaining largely unchanged from the prior year, but beating estimates for a reading of T$617.24 billion. The figure was also above TSMC’s forecast for the year.
Revenue improved from the prior quarter on improved demand for its 3 nanometer chips, which TSMC describes as the industry’s most advanced semiconductor technology.
Demand for high-performance computing chips also improved in the quarter, likely boosted by increasing interest in artificial intelligence development over the past year. The launch of OpenAI’s Chat GPT bot had triggered a widespread rush into the development and application of similar AI products.
AI development uses a large amount of computing power, which in turn requires more advanced, higher-power silicone. This also spells higher demand for TSMC.
Analysts had expected an improvement in TSMCs earnings amid dwindling inventory levels among PC and smartphone manufacturers. This also helped shore up chip demand from a lull caused by weak electronics demand, easing technology investment and high interest rates.
TSMC is a key supplier to tech majors Apple Inc (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), the latter of which has benefited greatly from increased demand for AI chips. Nvidia had recently unveiled a new line of chips dedicated solely towards AI development.
TSMC’s earnings have now beaten estimates for all four quarters of 2023, which, coupled with the prospect of improving chip demand, saw the firm’s Taiwan stock rally over 30% in the past year.
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