Taiwan Semiconductor Manufacturing Company (TSMC) issued an optimistic revenue target for the current quarter after reporting a near double-digit rise in net profit in the opening quarter of 2024, fuelled by brisk demand for chips supporting AI applications.

The contract chipmaker predicted Q2 revenue to increase by up to 30 per cent year-on-year to between $19.6 billion and $20.4 billion, ahead of a full-year forecast in January targeting 20 per cent to 25 per cent growth.

CEO CC Wei explained in an earnings call it expects server AI processors to be the strongest driver of its high-performance computing platform growth and the largest contributor of its overall incremental revenue growth for the next several years.

Wei said the company forecasts revenue from server AI processors to more than double this year and account for a low-teens percentage of total revenue. For the next five years, it predicts 50 per cent annual growth. 

CFO Wendell Huang said it expects Q2 business to be supported by strong demand for 3nm and 5nm technologies, partially offset by “continued smartphone seasonality”.

Net income in Q1 rose 9.8 per cent from a year earlier to TWD225.5 billion ($6.9 billion).

The company last week reported a 16.5 per cent increase in revenue in the opening quarter to TWD592.6 billion.

Q1 shipments of 3nm chips, which went into production last year, accounted for 9 per cent of total wafer revenue; 5nm product accounted for 37 per cent, up from 30 per cent a year earlier; and 7nm components 19 per cent, down from 23 per cent.

The company is a key supplier to Nvidia and Apple.