TSMC Earnings, Cerebras S1, Custom Semi Rumors, Apple CEO Change

Why It Matters

TSMC’s AI‑fuelled expansion reshapes the semiconductor supply chain, influencing margins, pricing dynamics, and competitive positioning for the entire industry.

Key Takeaways

• TSMC beats Q1 expectations but shares fell despite strong results.
• Margin expansion driven by AI demand; N3 fab additions highlighted.
• CapEx raised for additional N3 capacity and future advanced packaging.
• TSMC emphasizes partner success over price hikes, maintaining collaborative culture.
• Advanced packaging challenges persist; CoWoS timeline extended, competition intensifies.

Summary

The episode opens with Ben Bajarin and Jay Goldberg dissecting TSMC’s latest earnings release. The Taiwanese foundry posted revenue and margin beats for the March quarter, lifted its capital‑expenditure outlook, and announced a second N3 fab in Tainan and a new N3 line in Japan, all under the banner of soaring AI demand.

Analysts note that TSMC’s gross margin hovered around 61 %—well above the industry average—and could climb toward the high‑60s as N3 yields improve. The company also raised its CapEx guidance, signaling confidence that AI‑driven workloads will sustain growth despite lingering softness in smartphones and PCs. Legacy nodes such as 5 nm and even 7 nm continue to generate meaningful revenue, underscoring the breadth of the AI wave.

A memorable moment from the Q&A was the repeated answer “AI” to every strategic question, from why the firm is adding N3 capacity to why guidance was upgraded. Management also stressed a partner‑first philosophy, refusing to hike prices and instead focusing on shared success. On the packaging front, TSMC admitted CoWoS remains technically challenging and may not hit volume until 2028‑2029, while Intel’s EMIB appears to be gaining ground.

The implications are clear: AI is cementing TSMC’s role as the industry’s capacity bottleneck, justifying aggressive capex and margin expectations. However, the firm’s cautious pricing stance and packaging constraints could invite competitive pressure from Intel and emerging OSAT partners. Investors and downstream chipmakers must watch how quickly TSMC can translate AI demand into sustainable, high‑margin growth.

Original Description

In this episode of The Circuit, Ben Bajarin and Jay Goldberg analyze a pivotal week in tech, beginning with TSMC’s strong earnings and their strategic decision to ramp up CapEx and N3 production specifically to meet massive AI demand. The duo explores the industry-wide compute deficit impacting firms like Anthropic and the potential IPO of Cerebras, while discussing the fragmenting market for custom ASICs as Google explores design partners like Marvell and MediaTek. Finally, they weigh in on the end of an era at Apple with Tim Cook stepping down; they argue his greatest legacy was preserving the company’s unique culture while handing the reins to John Ternus to lead a new hardware and AI growth cycle.

00:00 Introduction and Context

01:03 TSMC’s Earnings and Margin Expansion

03:30 The Street’s Reaction to CapEx and Dividend Increases

05:36 Why the Answer to Everything is AI

07:16 TSMC’s Capacity, Pricing, and Market Value

09:14 Intel Competition and Advanced Packaging (CoWoS vs. EMIB)

11:28 Roadmaps for 2nm, Glass Substrates, and Photonics

17:34 Cerebras S1 Filing: Wafer Scale Engines for Inference

22:32 The Global Compute Deficit and Inference Demand

28:13 CPU Shortages and ABF Substrate Scarcity

31:30 Custom ASICs: Fragmenting the Market (Google, Marvell, Broadcom)

37:50 Jensen Huang and the Concept of "Premium Tokens"

43:18 The Economics of Tokenomics: Telecom Parallels

46:16 Apple Leadership: Tim Cook Steps Down, John Ternes Takes Over

49:09 Preserving Apple’s Culture Post-Tim Cook