The Taiwanese semiconductor manufacturing company released Q1 2024 financial results this week. The company posted revenue of $18.87 billion for the quarter, up 12.9 percent year-over-year, but due to increased demand for semiconductors. A quarter-over-quarter decline of 3.8%. The company says rising demand for HPC processors (which includes processors for AI, PCs and servers) boosted its revenue in Q1, but surprisingly, TSMC's flagship N3 (3nm-class ) process technology's revenue share declined sharply in the quarter. More than a quarter

“Our business in the first quarter was impacted by smartphone seasonality, partially offset by HPC-related demand,” said Wendell Huang, TSMC's senior VP and chief financial officer. “Going into the second quarter of 2024, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by the continued smartphone boom.” “

In Q1 2024, N3 wafer sales accounted for 9% of foundry revenue, down from 15% in Q4 2023, and up from 6% in Q3 2023. In dollar terms, TSMC's 3nm production brought in about $1.698 billion, down from $2.943 billion in the previous quarter. Meanwhile, TSMC's other advanced process technologies increased its revenue share: N5 (5 nm-class) accounted for 37% (up from 35%) and N7 (7 nm-class) for 19% (up from 17%). reduced to Although both remained relatively flat in terms of revenue, at $6.981 billion and $3.585 billion respectively.

In general, advanced technology nodes (N7, N5, N3) generated 65% of TSMC's revenue (down 2% from Q4 2023), while the broad category of FinFET-based process technologies contributed to the company's total wafer revenue. contributed 74% (down 1% from last quarter).

TSMC itself attributes the sharp drop in N3 contribution to seasonally lower demand for smartphones in the first quarter compared to the fourth quarter, which may actually be the case as demand for iPhones generally slows in Q1. It falls. Along these lines, there have also been reports of declining demand for the latest iPhones in China.

But even if A17 Pro production volumes are low, Apple remains TSMC's lead customer for N3B, as the fab also produces its M3, M3 Pro, and M3 Max processors on the same node. These SoCs are large in terms of die sizes and resulting costs, so their share of TSMC's revenue should be substantial.

“Revenue contribution by platform continues to grow. HPC grew 3% quarter over quarter accounting for 46% of our first quarter revenue,” Huang said. “Smartphone was down 16 percent to 38 percent. IoT was up 5 percent to 6 percent. Automotive was flat to 6 percent, and DCE was up 33 percent to 2 percent.”

Meanwhile, as demand for AI and HPC processors continues to grow in the coming years, TSMC expects its HPC platform to continue to contribute to its revenue going forward.

CC Wei, Chief Executive of TSMC, said, “We expect several AI processors to be the strongest drivers of our HPC platform growth and the largest contributors to our overall revenue growth over the next several years. shall be.”