Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest chip manufacturer with major clients including Apple and Nvidia, has reported significant financial growth in the first quarter of 2024. The company, which is pivotal in the production of advanced chips for various applications including AI, mobile phones, and high-performance computing (HPC), announced a nearly 9% increase in net profits to NT$225.4 billion ($6.97 billion), up from NT$206.9 billion in the same period the previous year. This growth exceeded expectations, coming in the face of increased global demand for microchips, particularly those used in AI technology. Revenues also rose by 13 percent year-on-year to $18.87 billion.

During an earnings call, TSMC's CFO, Wendell Huang, revealed plans for the company's revenue to surge by 27.6 percent in the second quarter, driven by strong demand for their industry-leading 3nm and 5nm technologies. This demand is fueled, in part, by the rising utility of generative AI and other cutting-edge technologies, despite a slower recovery in the PC and smartphone sectors than initially anticipated.

Facing geopolitical tension and natural disasters such as a recent magnitude-7.4 earthquake in Taiwan—which led to a certain number of wafers being scrapped—TSMC has maintained a resilient supply chain, ensuring minimal impact on its revenue. The company is expanding its manufacturing footprint as part of its strategy to mitigate these risks, with a significant focus on the US market. TSMC announced the construction of a third semiconductor factory in Arizona, adding to its initial two fabrication units. This move was bolstered by a preliminary agreement with the US Commerce Department, linked to the Chips and Science Act, promising TSMC up to $6.6 billion in direct funding, thereby raising its total investment in the United States to $65 billion.

CEO CC Wei outlined the progress in Arizona, highlighting that the first fab has already begun engineering wafer production in April 2024, with volume production expected in the first half of 2025. Additionally, the second fab has been upgraded to employ 2-nanometer technology to cater to the surging AI-related demand. This expansion marks a significant milestone as it introduces the production of super-advanced chips on American soil for the first time.

Moreover, TSMC is not only expanding in the United States but also in Japan, with a new $8.6 billion plant launched in Kyushu and another planned facility in Kumamoto for more advanced chips. This global expansion underscores TSMC's response to the critical demand for semiconductors, securing its supply chain against potential disruptions while catering to the booming demand for chips powering the modern digital era.

Despite the robust growth and ambitious expansion plans, TSMC remains cautious about the future, mindful of how global macroeconomic and geopolitical uncertainties could influence the consumer electronics market. Yet, the company's strategic investments and its pivotal role in the global supply chain for advanced microchips position it well to navigate these challenges.