Taiwan Semiconductor Manufacturing Company (TSMC) is set to see a significant boost in profits, driven by the growing demand for advanced chips amid the generative artificial intelligence surge. Analysts from FactSet expect TSMC to report a net income of NT$236.4 billion (approximately $7.3 billion) for Q2 2024, reflecting a 30% increase compared to the NT$181.8 billion reported a year earlier.
TSMC, which has an exclusive agreement with AI chip designer Nvidia and also manufactures chips for Apple, has experienced an 82.9% rise in its shares this year. The company is scheduled to release its second-quarter earnings on Thursday.
In June, TSMC announced a net revenue of $7.1 billion for May, representing a year-over-year increase of 30%. Although this marked a 2.7% decline from April, the company’s revenue for January through May grew by 27% compared to the same period the previous year. TSMC chairman and CEO C.C. Wei reaffirmed in early June that the chip market, barring the memory sector, is expected to grow by 10% this year due to the AI boom.
Back in April, TSMC forecasted a potential 30% increase in second-quarter sales, driven by high demand from clients such as Nvidia and Apple. The company set its second-quarter revenue expectations between $19.6 billion and $20.4 billion, surpassing the previous estimate of $19.1 billion. It also plans to maintain its investment of up to $32 billion this year, primarily focusing on advanced technologies.
Senior Vice President and CFO Wendell Huang stated in April that the company anticipates strong demand for its leading 3nm and 5nm technologies in Q2 2024, although this would be somewhat balanced by typical smartphone seasonality.
Earlier this year, TSMC secured $6.6 billion in grants through the federal CHIPS and Science Act, supporting its major U.S. chipmaking hub in Phoenix. TSMC already operates two chipmaking facilities in Arizona, set to commence production in 2025 and 2028. The new funding will help build a third facility, increasing TSMC’s total investment in the region from $40 million to $65 million.