Taiwan Semiconductor Manufacturing Company (TSMC) recently released its second-quarter results, surpassing both revenue and profit expectations. The company reported an impressive revenue of 673.51 billion New Taiwan dollars ($20.82 billion), exceeding the expected NT$657.58 billion. Net income also outperformed forecasts, coming in at NT$247.85 billion compared to the estimated NT$238.8 billion. These numbers reflect a significant growth of 40.1% in net revenue and 36.3% in net income from the previous year.
TSMC attributed its strong performance in the second quarter to the soaring demand for advanced chips used in AI applications. Chairman and CEO C.C. Wei highlighted the impact of the company’s cutting-edge 3-nanometer and 5-nanometer technologies, which have been in high demand. Despite facing challenges from the continuous seasonality of the smartphone market, TSMC managed to capitalize on the explosive growth in AI applications, which led to a surge in chip supplies. The company’s unrivaled position as a leading producer of advanced chips has solidified its partnerships with tech giants like Apple and Nvidia.
Looking ahead, TSMC remains optimistic about its growth prospects, with plans to introduce 2-nanometer chips in 2025. The development of smaller nanometer sizes is expected to enhance the performance and efficiency of these chips. The company projects a robust third quarter, driven by strong demand in the smartphone and AI sectors. TSMC anticipates 2024 to be a year of significant growth, with third-quarter revenue expected to range between $22.4 billion and $23.2 billion, marking a substantial increase from the previous year.
In line with its commitment to technological advancement, TSMC is focusing its capital budget on developing advanced technologies. The company plans to allocate 70% to 80% of its budget towards innovative initiatives. To meet the escalating demand for 3-nanometer chips, TSMC is exploring the possibility of converting more existing technology to enhance production capacity. Despite facing challenges in the global tech market, particularly related to export restrictions, TSMC remains resilient and adaptable to market dynamics.
TSMC’s impressive performance has not gone unnoticed, with its Taiwan-listed shares climbing nearly 70% year-to-date. Analysts and industry experts have expressed confidence in the company’s growth trajectory. Counterpoint Research’s associate director, Brady Wang, highlighted the surging demand for AI applications and TSMC’s leadership in advanced chip production. Needham analysts also anticipate further revenue growth for TSMC, projecting an increase in revenue targets for 2024. The company’s market dominance, with 62% global market share in the foundry sector, further solidifies its position as an industry leader.
Taiwan Semiconductor Manufacturing Company’s success story is a testament to its relentless innovation, strategic partnerships, and market adaptability. With a strong focus on cutting-edge technologies and a growing demand for advanced chips, TSMC is poised for continued growth and market leadership in the semiconductor industry.