TSMC has seen an increase in Nvidia’s AI chip orders over the past few months, the sources said. Relevant media also quoted market sources as saying that orders for Nvidia A100 and H100, two high-performance GPUs for data centers, are increasing, and they have also increased their investment in TSMC.

The source also pointed out that the demand for Nvidia AI chips from major companies around the world has been strong. For example, major companies such as Alibaba Cloud, Baidu AICloud and Tencent Cloud in China are actively acquiring artificial intelligence chips; Demand for Nvidia’s AI chips was also strong.

According to reports, Nvidia’s H100 GPU uses TSMC’s 4nm process and A100’s 7nm process. Nvidia’s current top H100 Tensor Core GPU adopts the Hopper architecture and is manufactured based on TSMC’s 4nm process. It is equipped with the fourth-generation Tensor Core and Transformer engines. The card is equipped with 80GB of video memory, which doubles the computing efficiency per kilowatt compared to the A100 GPU.

Nvidia’s DGX H100 system features eight H100 GPUs connected via NVIDIA NVLink to form a single unit. The NVIDIA H100 system has been used by many well-known universities and technology companies in the world.

TSMC currently sees no real competition in the sub-7nm process that supports AI chip manufacturing. Intel has returned to the foundry space but has yet to make any meaningful progress.

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Compared with the same period in 2022, revenue in the first quarter of 2023 increased by 3.6%, and net profit after tax and earnings per share both increased by 2.1%, the smallest quarterly increase in nearly four years, but still exceeded market expectations. Compared with the previous quarter, the revenue in the first quarter of 2023 decreased by 18.7%, and the net profit after tax decreased by 30.0%. The above financial figures are all consolidated financial statement figures prepared in accordance with the International Financial Reporting Standards (TIFRS) approved by the FSC.

In US dollars, revenue in the first quarter of 2023 will be 16.72 billion CNY, a decrease of 4.8% from the same period in 2021, and a decrease of 16.1% from the previous quarter.

In the first quarter of 2023, the gross margin was 56.3%, the operating margin was 45.5%, and the after-tax net profit margin was 40.7%.

5nm process shipments accounted for 31% of TSMC’s wafer sales in the first quarter of 2023; 7nm process shipments accounted for 20% of the full quarter’s wafer sales. Overall, revenue from advanced processes (including 7nm and beyond) accounted for 51% of the quarterly wafer sales.

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Compared to the same period last year, fourth-quarter revenue increased 42.8% year-over-year, while net income and diluted earnings per share both increased 78.0%. Compared to the third quarter of 2022, fourth-quarter revenue increased 2.0 percent sequentially and net income increased 5.4 percent.

On a U.S. dollar basis, fourth-quarter revenue was $19.93 billion (currently approximately RMB134.926 billion), up 26.7 percent year-over-year but down 1.5 percent sequentially. The gross margin for the fourth quarter was 62.2 percent, the operating margin was 52.0 percent and net margin was 47.3 percent.

TSMC said 5nm shipments accounted for 32% of total wafer revenue in the fourth quarter, and 7nm accounted for 22%. Taken together, 7nm and more advanced technologies accounted for 54% of total wafer revenue.

TSMC’s operating income from January to December 2022 will be NT$2,263.89 billion (currently approximately RMB 502.584 billion), a year-on-year increase of 42.6%.

TSMC expects first-quarter sales of US$16.7 billion to US$17.5 billion, which is currently about 113.059 billion to 118.475 billion yuan.

According to a previous report by the Taiwan Economic Daily, the supply chain is rumored that TSMC is driven by the three major driving forces of advanced process expansion in Taiwan, investment in R&D, US and Japan expansion, and mature process upgrades due to the growing needs of the next three years. Expenditure is expected to approach 40 billion U.S. dollars (currently about 276.8 billion yuan), a new high.

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