Taiwan Semiconductor (TSM) shares are rising after the company reported that its sales jumped nearly 60% year over year. Yahoo Finance’s Dan Howley joins The Morning Brief to discuss the company’s position in the AI chip race.
The rising demand for chips built for artificial intelligence largely drove Taiwan Semiconductor’s sales last quarter. The company also produces smartphone chips, but AI chips took the lead as demand slumped.
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This post was written by Melanie Riehl
Video Transcript
Shifting to the chip sector.
Taiwan semi shares rising after reporting that sales jumped nearly 60% in April from a year ago.
Yahoo FINANCE is Dan Howley has more on that for us?
That’s right.
They jump 59.6% year over year.
That’s better than any other month so far this year, although it’s only may still, uh, it’s a huge jump.
And, uh, I think the real reasons for this are clear.
That’s, you know, the AI craze driving everybody to go out, uh, and and purchase chips or, uh, request chips to be, uh, created or or or built.
You know, the likes of, uh, NVIDIA a MD, Uh, and And what Not, uh, And then the kind of somewhat return of the smartphone market there was that huge, uh, dip that we had seen.
Uh, now we’re starting to see, uh, that begin to climb back.
Uh, and and that’s going to drive sales at TSNC.
Uh, just because so many of those chips, uh, are made at, uh, TSM CS facilities.
So, uh, we’re seeing that, uh, and the AI, uh, demand kind of come together to help push, uh, the company’s sales, Uh, much higher in the last month.
Um, it’ll all depend where we start to see the smartphone market really go, though.
Is it going to be a huge jump?
Uh, in demand?
Is it going to be, uh, you know, a general improvement, or is it going to be a slog to get back to where it was?
So, uh, I think that that’s going to be one of the main things to watch.
But on the flip side, the AI side of things is going to continue, uh, to drive a lot of demand and sales, Uh, especially for more expensive, more advanced chips.
And for TS MC.
I mean, this is a company that’s continued to see what 50% margins on their foundry business and they’re waiting for.
Well, they would have it as no competition entering the market.
But there is more competition that’s gonna be entering this market.
Intel.
It’s gonna take them some time to scale.
I think 2030 is what we’re hearing that they would even get to what 40% margins on their foundry business by.
Story continues
So how much, uh, of the lead time is TS MC.
Still believing is baked into this business.
And for investors to still continue to expect results like this.
Yeah.
I mean, for there’s there’s two things.
There’s the foundry business.
Uh, and there’s, uh, the ability to produce, uh, very high end chips.
Uh, and so Intel is trying to do the very high end chips.
They’re just about there, uh, with regards to that as far as their foundry business goes, though, Yeah, you’re right.
It’s It’s going to take quite a while for them, uh, to get up to snuff.
They’re they’re still going to be producing largely intel chips, Uh, for the foreseeable future, Uh, until they start to get more.
Uh uh, customers.
Now they do say that they have customers lined up.
One of the big ones they have is Microsoft.
They’re gonna be building their own chip.
Uh, Intel does have, uh, a road map.
That is very impressive.
It’s just about now kind of executing on that.
And so for TS MC?
Yes.
It means that there’s, uh, you know, competition, but kind of as you were alluding to it’s It’s pretty far off at this point.
Um, and you know, they are still the world’s largest manufacturer of, uh, processors.
Great context there.
Yahoo Finance’s own Dan Howie Day.
And great to see you here this morning.
Thanks so much.
