Written by Yimou Lee, Ben Blanchard, Faith Hung
TAIPEI (Reuters) – TSMC, the world’s largest contract semiconductor maker, said on Thursday that a surge in demand for artificial intelligence (AI) chips led to a better-than-expected 54% rise in quarterly profit, betting it will maintain strong growth. .
Taiwan Semiconductor Manufacturing Co., Ltd. is a leading manufacturer of advanced chips used in AI applications with customers such as Apple and Nvidia, and has been a rapid beneficiary of AI across a variety of industries.
TSMC estimates that its capital expenditures will more than double this quarter to about $11.5 billion, and that the budget is likely to increase further next year as it anticipates healthy demand for its products.
The company said it expects sales for the full year of 2024 to increase by nearly 30% in US dollar terms, compared to previous forecasts of slightly above the mid-20% range.
TSMC said revenue from AI processors is expected to account for mid-teens of its total revenue this year.
“The demand is real,” Chairman and CEO CC Wei said of AI during an earnings call, adding that it will be here for years.
ASML, the world’s largest chip-making equipment supplier, has reported a weaker-than-expected 2025 revenue outlook earlier this week, raising questions from some industry insiders. The company’s strong performance and outlook support continued strong demand for AI.
Shares of U.S. chipmakers including AI processor giant Nvidia and rival AMD rose more than 2.5% in premarket trading. Shares of Broadcom, Micron Technology, Intel and Qualcomm rose 1.5% to 3%.
U.S.-listed TSMC shares rose more than 8%, and if pre-market gains continue, the company’s market capitalization is on track to exceed $1 trillion.
TSMC said in its quarterly results conference on Thursday that it expects capital expenditures to be slightly more than $30 billion this year, compared to its previous forecast of $30 billion to $32 billion, as it rushes to expand production.
TSMC said capital spending in 2025 is likely to be higher than this year, although it did not provide figures.
He said next year was likely to be “healthy” and predicted a similar outlook for the next five years.
Peter Yang, fund manager at Fuhua Securities Investment Trust, said TSMC’s results put to rest concerns about the industry caused by ASML’s earnings.
“TSMC is a dominant company,” he said. “We are the only company with advanced process technology not found in companies like Intel and Samsung.”
TSMC is spending tens of billions of dollars building new factories overseas, including $65 billion for three factories in the U.S. state of Arizona, but says the bulk of its manufacturing will remain in Taiwan.
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The company said Thursday that it expects its first factory in Arizona to begin mass production in 2025 and its second factory in Arizona in 2028. The company expects its third plant in Arizona to begin mass production by the end of 2020.
The Taiwanese semiconductor maker said it expects fourth-quarter sales of $26.1 billion to $26.9 billion, up from $19.62 billion in the same period in 2023.
record quarterly profit
The chip industry bellwether on Thursday reported net profit of NT$325.3 billion ($10.11 billion) for the quarter that ended Sept. 30, compared with the LSEG SmartEstimate’s forecast of NT$300.2 billion based on 22 analysts. It was reported that this was the highest for the quarter. . SmartEstimates places more emphasis on consistently accurate analyst forecasts.
TSMC, Asia’s most valuable listed company, said third-quarter revenue rose 36% year-on-year to $23.5 billion, beating the company’s previous estimate of $22.4 billion to $23.2 billion. Last week, the company announced third-quarter sales of NT$759.69 billion.
“Our business in the third quarter was driven by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” TSMC Chief Financial Officer Wendell Huang said in an earnings call. Ta. “As we move into the fourth quarter of 2024, we expect our business to continue to be supported by strong demand for our cutting-edge process technologies.”
The second half of the year is traditionally a peak season for Taiwanese technology companies as they rush to supply customers ahead of the year-end holiday season in major Western markets.
TSMC said its capital expenditures in the third quarter were $6.4 billion, compared to $6.36 billion in the second quarter.
The AI boom has helped boost TSMC stock, with the Taipei-listed stock soaring 75% so far this year, compared with a 28% rise in the broader market, giving the company a market capitalization of about $840 billion. .
TSMC, colloquially referred to in Taiwan as the “sacred mountain that protects the nation” because of its critical role in Taiwan’s export-dependent economy, remains in power despite attempts by both Intel and Samsung to challenge its dominance. , faces little competition.
(1 dollar = 32.1700 Taiwan dollar)
(Reporting by Yimou Lee, Ben Blanchard and Faith Hung; Additional reporting by Arsheeya Bajwa; Editing by Christopher Cushing, Muralikumar Anantharaman and Tomasz Janowski)
