TSMC's April Revenue Surges 48% Amid Tariff Fears

Taiwan Semiconductor Manufacturing Company (TSMC) reported a significant 48% increase in revenue for April, driven by a surge in demand from global enterprises rushing to stockpile chips ahead of new tariff policies. The company's monthly sales reached NT$349.6 billion, approximately USD 11.6 billion, surpassing analysts' average expectation of a 38% increase in second-quarter revenue. This substantial growth highlights the urgency with which electronic companies are securing critical components before the implementation of new trade policies.

As a key supplier to major tech giants like Apple and Nvidia, TSMC's performance is indicative of broader trends in global tech spending. Despite economic uncertainties and negative impacts on various sectors due to ongoing trade tensions, TSMC's strong market demand, particularly for high-end chips crucial for artificial intelligence development, underscores its pivotal role in the supply chain.

However, the recent appreciation of the New Taiwan dollar poses a potential challenge to TSMC's future profitability. Given that a majority of TSMC's business is denominated in US dollars, every 1% appreciation in the New Taiwan dollar could reduce its operating profit margin by 0.4 percentage points. This currency fluctuation adds an element of risk to the company's financial outlook.

The recent decision by the Trump administration to lift some restrictions on AI chip exports, part of a broader effort to modify global semiconductor trade limitations, could provide a short-term boost for TSMC. The company, which derives 20% of its sales from AI chip production, stands to benefit from this temporary easing of restrictions. Nevertheless, the long-term outlook remains uncertain as the US government prepares to introduce new, potentially more stringent export controls aimed at preventing China from indirectly acquiring US-designed AI chips.

In summary, while TSMC's April revenue surge reflects the current demand for semiconductors amidst trade tensions, the company faces both opportunities and challenges. The lifting of some AI chip export restrictions offers a short-term advantage, but the impending new regulations and currency fluctuations present ongoing risks. TSMC's ability to navigate these complexities will be crucial in maintaining its leadership position in the global semiconductor market.