Janice R. Andrews
Raising its revenue growth forecasts for 2024, Taiwan Semiconductor Manufacturing Co. (TSMC) is demonstrating its belief in the sustained upswing in worldwide AI spending. Leading global semiconductor supplier to digital behemoths like Apple Inc. and Nvidia Corp., the company now expects sales growth to surpass its earlier projected mid-20% maximum. Following TSMC’s quarterly results that above analysts’ forecasts, this change was made.
TSMC expects sales for the current quarter to exceed market estimates by up to $23.2 billion. The corporation has also raised its capital expenditure expectations from the previous minimum of $28 billion to the upper end of its previous range, aiming to spend between $30 billion and $32 billion. These changes confirm TSMC’s prediction that despite growing trade tensions between the US and China, AI spending will continue to be strong.
Tech companies and startups—ranging from Microsoft Corp. to Baidu Inc.—are making significant investments in AI infrastructure in China and the US, largely due to Nvidia accelerators. The shares of TSMC that are listed in the US have benefited from this ongoing demand, as they have increased by almost 3.6% in pre-market trading.
A lot was expected of TSMC’s report, particularly since the smartphone market—another important source of income for the company—seemed to be improving. Apple, encouraged by the possible success of its new AI services, has given its suppliers positive forecasts regarding the shipments of the upcoming iPhone 16. This helped TSMC’s June-quarter profit increase by 36%, which was better than anticipated.
During a Thursday earnings call, C.C. Wei, the chief executive officer of TSMC, stated, “This time, AI demand is more real than two or three years ago.” Wei noted that “the supply continues to be very, very tight all the way into 2025,” emphasizing that the company is expanding its capacity to strike the correct balance.
With revenues increasing at their quickest rate since 2022 in the second quarter, TSMC’s net income soared to NT$247.8 billion ($7.6 billion). This is the first time that TSMC’s high-performance computing division has accounted for more than half of its sales; specifically, artificial intelligence (AI) contributed for 52% of the company’s revenue.
The company’s strategic posture in the midst of a flourishing AI market is reflected in the modifications to TSMC’s capital spending plans and revenue outlook. As AI technology develops and becomes more integrated into many industries, TSMC’s position as a vital supplier for significant tech companies is expected to grow, spurring additional innovation and growth.
