Taiwan Semiconductor Manufacturing Company (TSMC) exceeded revenue and profit expectations in the second quarter, driven by the growing demand for advanced chips used in AI applications.
| Metric | Q2 2024 Actual | Q2 2024 Expected (LSEG Consensus) |
|---|---|---|
| Revenue | NT$673.51 billion ($20.82 billion) | NT$657.58 billion |
| Net Income | NT$247.85 billion | NT$238.8 billion |
TSMC reported a rise in its financials compared to the same period last year. Net revenue increased by 40.1% to NT$673.51 billion, and net income surged by 36.3% to NT$247.85 billion. The company had forecasted second-quarter revenue to range between $19.6 billion and $20.4 billion.
Chairman and CEO C.C. Wei highlighted the strong demand for TSMC’s leading 3-nanometer and 5-nanometer technologies during an earnings call, although smartphone seasonality continued to impact results.
The explosive demand for AI has stretched chip supplies. TSMC, the primary producer of advanced chips used in a variety of applications from smartphones to AI, faces competition from Samsung and Intel. Apple and Nvidia are among its notable clients.
“I also try to reach the supply and demand balance, but I cannot. Today, the demand is so high I had to work very hard to meet customer demand,” Wei stated. He anticipates achieving this balance by 2025 or 2026.
Looking ahead to the third quarter, TSMC expects to be bolstered by robust smartphone and AI-related demand, forecasting revenue between $22.4 billion and $23.2 billion, compared to $17.3 billion from the same period last year.
TSMC’s Taiwan-listed shares have surged by nearly 70% this year, driven by the high demand for advanced AI chips. The company currently produces 3-nanometer chips and plans to start mass production of 2-nanometer chips in 2025, which promise more power and efficiency due to their smaller size.
Brady Wang, associate director of Counterpoint Research, noted that the demand for generative AI is increasing both in the cloud and at the edge. TSMC’s N3 process, with good yield rates and well-managed production lines, benefits from market funding and regional political factors. He expects the capacity of the 3-nanometer process to more than double in 2024 compared to the previous year.
Needham analysts anticipate that TSMC will raise its 2024 revenue growth target and maintain its capital expenditures target at $30 billion. They have reiterated a “buy” rating and increased the price target for TSMC’s U.S.-listed shares to $210 from $168.
TSMC held 62% of the global foundry market share in the first quarter, up from 59% a year ago, according to Counterpoint Research data.
Featured Image courtesy of Tech Wire Asia
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