What happened

Shares of Taiwan Semiconductor Manufacturing (TSM -2.40%), also known as TSMC, surged higher Thursday, jumping as much as 5.3%. As of 10:55 a.m. ET today, the stock was still up 3%.

The catalyst that sent the semiconductor specialist higher was quarterly results that weren't nearly as bad as investors had feared.

So what

For the first quarter, revenue was 508.63 billion New Taiwan dollars (roughly $16.65 billion), an increase of 3.6%. The bottom line also climbed, with net income of 206.99 billion New Taiwan dollars (roughly $6.78 billion), an increase of 2%. This resulted in diluted earnings per American depositary share of about $1.31. 

To put its results into the context of expectations, analysts' consensus estimates had been calling for revenue of $16.6 billion and EPS of $1.21, so the results were better than expected. 

As the world's largest contract chip manufacturer, TSMC is seen as a bellwether for the semiconductor industry, which has suffered at the hands of the economic slowdown in the U.S. Apple is the company's largest customer, with its purchases representing roughly 26% of its revenue last year. TSMC also supplies semiconductors for other high-profile chip companies, including Nvidia. Both companies have reported year-over-year sales declines in their most recent quarters.

Now what

TSMC expects the current challenging environment to continue. "Our first-quarter business was impacted by weakening macroeconomic conditions," chief financial officer Wendell Huang said. "Moving into second quarter 2023, we expect our business to continue to be impacted by customers' further inventory adjustment."

The company expects second-quarter revenue in a range of $15.2 billion to $16 billion, with operating margins of 40.5% at the midpoint of its guidance, down from 45.5% in the current quarter. Analysts' consensus estimates were calling for revenue of $16.1 billion, helping to illustrate the depth of the expected sales decline.

Loop Capital analyst Charles Park sees the glass as half full. Despite the current macroeconomic conditions, "TSMC is better positioned to weather the slowdown and should benefit from the structural growth in semis longer term," Park said, according to The Fly. 

For investors with a longer-term outlook, this is merely a bump in the road.