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TSMC sees 5% rise in first-quarter profit on robust demand for advanced chips

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Taiwan Semiconductor Manufacturing (TSMC), the leading manufacturer of advanced chips used in artificial intelligence applications, is expected to register a 5% increase in its first quarter profit, driven by strong market demand.

The world's largest contract chipmaker, whose clients include Apple and Nvidia, has seen rising demand for artificial intelligence offset a decline in demand for electronics during the pandemic, leading TSMC shares to reach record levels.

According to LSEG's SmartEstimate compiled by 22 analysts, TSMC is expected to post a net profit of NT$217.2 billion (approximately US$6.71 billion) in the quarter ended March 31, compared with NT$206.9 billion from the same period of the previous year.

Last week, TSMC announced a 16.5% increase in its first-quarter revenue, beating market expectations and positioning itself at the high end of the company's forecasts.

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Eric Yao, vice president of Eastspring Investments in Taiwan, expressed optimism about TSMC's prospects due to US$6.6 billion in subsidies for new plants in Arizona, which bode well for the company's leadership in advanced process technologies. .

In contrast, rivals such as Intel and Samsung face challenges in catching up to TSMC. Intel has reported significant operating losses in its foundry business, while TSMC announced the construction of a third factory in Arizona.

Analysts at Fubon Securities also predict that TSMC will increase its artificial intelligence demand expectations for the coming years. AI is expected to account for a sizable portion of TSMC's revenue by 2025, earlier than originally planned for 2026.

The surge in demand for artificial intelligence has contributed to the rise in TSMC's share price, which has risen 36% this year to an all-time high, outpacing the broader market's gain of 14%.

TSMC has an earnings call scheduled for Thursday at 0600 GMT, where this data and outlook is expected to be detailed.

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