TSMC’s Q1’24 Report: 3nm Revenue Share Plummets, HPC Share Surges

TSMC reports a 12.9% increase in revenue for Q1 2024, driven by demand for high-performance computing processors, while their flagship N3 technology experiences a decline in revenue share.

12.9% increase in revenue compared to same period last year
Strong demand for high-performance computing processors
Optimistic outlook for second quarter of 2024

Taiwan Semiconductor Manufacturing Co. (TSMC) has reported its financial results for the first quarter of 2024, revealing a revenue of $18.87 billion. This marks a 12.9% increase compared to the same period last year, although there was a slight decline of 3.8% from the previous quarter. The company attributes the revenue rebound to a surge in demand for high-performance computing (HPC) processors, which includes processors for artificial intelligence (AI), personal computers (PCs), and servers.

Interestingly, TSMC’s flagship N3 (3nm-class) process technology experienced a significant decline in revenue share quarter-over-quarter. Despite this, the company remains optimistic about the second quarter of 2024, anticipating strong demand for their industry-leading 3nm and 5nm technologies, albeit partially offset by the usual seasonality in smartphone demand.

In terms of revenue contribution, N3 wafer sales accounted for 9% of TSMC’s total revenue in Q1 2024, down from 15% in Q4 2023 but up from 6% in Q3 2023. The revenue generated from TSMC’s 3nm production reached approximately $1.698 billion, lower than the previous quarter’s $2.943 billion. On the other hand, TSMC’s other advanced process technologies, namely N5 (5 nm-class) and N7 (7 nm-class), saw an increase in their revenue share. N5 accounted for 37% of revenue, while N7 commanded 19%. Both remained relatively stable in terms of revenue, with $6.981 billion and $3.585 billion, respectively.

Overall, TSMC’s advanced technology nodes (N7, N5, N3) contributed to 65% of the company’s revenue, while the broader category of FinFET-based process technologies accounted for 74% of total wafer revenue.

The decline in N3’s contribution can be attributed to the lower demand for smartphones during the first quarter compared to the fourth quarter. This trend aligns with the usual slowdown in iPhone demand during Q1, and there have been reports of decreased demand for the latest iPhones in China.

However, despite the decrease in A17 Pro production volumes, Apple remains TSMC’s primary customer for N3B. TSMC also manufactures Apple’s M3, M3 Pro, and M3 Max processors on the same node. These system-on-chips (SoCs) have larger die sizes and higher costs, making their contribution to TSMC’s revenue significant.

In terms of revenue contribution by platform, HPC saw a 3% increase quarter-over-quarter, accounting for 46% of TSMC’s first-quarter revenue. Smartphone revenue decreased by 16%, representing 38% of total revenue. Internet of Things (IoT) revenue increased by 5%, accounting for 6% of revenue. Automotive remained flat at 6%, while Data Center Enterprise (DCE) revenue increased by 33%, representing 2% of total revenue.

Looking ahead, TSMC expects the demand for AI and HPC processors to continue growing in the coming years. The company anticipates that AI processors will be the primary driver of their HPC platform growth and the largest contributor to overall incremental revenue growth in the foreseeable future, according to C.C. Wei, TSMC’s chief executive.

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Background Information

About Apple:

Apple Inc., known for its iconic products, was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976. The company has since revolutionized the technology landscape with innovations like the Macintosh computer, iPod, iPhone, iPad, and more. for its emphasis on design, user experience, and ecosystem integration, Apple's devices and software have made a profound impact on various industries. With a commitment to quality and innovation, Apple remains a global technology leader.

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About TSMC:

TSMC, or Taiwan Semiconductor Manufacturing Company, is a semiconductor foundry based in Taiwan. Established in 1987, TSMC is a important player in the global semiconductor industry, specializing in the manufacturing of semiconductor wafers for a wide range of clients, including technology companies and chip designers. The company is known for its semiconductor fabrication processes and plays a critical role in advancing semiconductor technology worldwide.

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Technology Explained

HPC: HPC, or High Performance Computing, is a type of technology that allows computers to perform complex calculations and process large amounts of data at incredibly high speeds. This is achieved through the use of specialized hardware and software, such as supercomputers and parallel processing techniques. In the computer industry, HPC has a wide range of applications, from weather forecasting and scientific research to financial modeling and artificial intelligence. It enables researchers and businesses to tackle complex problems and analyze vast amounts of data in a fraction of the time it would take with traditional computing methods. HPC has revolutionized the way we approach data analysis and has opened up new possibilities for innovation and discovery in various fields.