TSMC hikes revenue outlook in a show of confidence on AI boom
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TSMC expects revenue of as much as US$23.2 billion (S$31.1 billion) this quarter.
PHOTO: AFP
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Taiwan Semiconductor Manufacturing Company (TSMC) raised its projections for full-year revenue growth after results beat estimates, riding a global wave of spending on artificial intelligence (AI).
The chipmaker for Apple and Nvidia now expects sales to grow more than the maximum mid-20 per cent it had guided towards previously. TSMC expects revenue of as much as US$23.2 billion (S$31.1 billion) this quarter, above analysts’ projections. And it narrowed its forecast for capital spending – a key indicator of where TSMC sees future demand – to the high end of its original forecast, to US$30 billion to US$32 billion from as low as US$28 billion previously.
The raised outlook conveys TSMC’s confidence in the longevity of an AI boom that began in late 2022 with the advent of OpenAI’s ChatGPT. That spurred global tech giants from Microsoft to Baidu to splurge on AI infrastructure, largely powered by Nvidia accelerators.
Market expectations had risen in the weeks leading up to TSMC’s report. The wider smartphone market – another big driver for Taiwan’s largest company – is on a path to recovery.
Apple provided an upbeat guidance to suppliers on shipments of its upcoming iPhone 16, based on the potential strength of its new AI services.
That helped TSMC report a better-than-anticipated 36 per cent rise in June-quarter profit.
Net income rose to NT$247.8 billion (S$10.2 billion), after the company disclosed its second-quarter sales grew at the fastest pace since 2022.
Shares of the world’s largest maker of advanced chips have more than doubled since the AI boom took off in late 2022, and hit a series of all-time highs as the firm’s market capitalisation briefly crossed the US$1 trillion mark.
Still, investor euphoria over TSMC’s prospects diminished on July 17 after Bloomberg Businessweek published comments by US Republican presidential nominee Donald Trump, who said he is at best lukewarm about defending Taiwan in the event of Chinese aggression.
On top of that, the US is also mulling over stricter chip curbs on China, Bloomberg News reported, triggering a global tech stock sell-off as investors pondered the fallout for the world’s largest semiconductor arena.
Caution about AI is now emerging in corners of the market. In July, Goldman Sachs warned that the biggest US tech firms may be spending too much on AI.
Before the results, SemiAnalysis’ Chaolien Tseng had warned that TSMC’s stock may take a hit if it did not lift its 2024 revenue growth to at least 25 per cent. BLOOMBERG
