Taiwan Semiconductor Manufacturing Company (TSMC) is set to benefit significantly from the rising demand amid the boom in generative artificial intelligence. Analysts predict that the company’s profits will surge by 30% year-over-year.
For the second quarter of 2024, TSMC is expected to report a net income of NT$236.4 billion (approximately $7.3 billion), according to FactSet analysts, compared to NT$181.8 billion from the same period the previous year. This forecasted growth is backed by TSMC’s exclusive partnership with AI chip designer Nvidia and its chip fabrication services for Apple. Consequently, TSMC’s stock has climbed 82.9% this year. The company will announce its second-quarter earnings on Thursday.
In May, TSMC reported a net revenue increase of 30% year-over-year, amounting to $7.1 billion, despite a slight decline of 2.7% from April. Across the period from January to May, TSMC’s revenue grew by 27% compared to the previous year. Chairman and CEO C.C. Wei reaffirmed that the chip market, excluding the memory sector, is expected to grow by 10% this year, largely due to the AI-driven demand.
Back in April, TSMC anticipated its second-quarter sales could rise by up to 30%, driven by key customers like Nvidia and Apple, setting revenue expectations between $19.6 billion and $20.4 billion—higher than the previous estimate of $19.1 billion. The company plans to invest up to $32 billion this year, primarily focusing on advanced technologies.
“Moving into the second quarter of 2024, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality,” said Wendell Huang, TSMC’s senior vice president and chief financial officer, in April.
Additionally, TSMC received $6.6 billion in grants from the federal CHIPS and Science Act earlier this year to support its first major U.S. chipmaking hub in Phoenix. The company already has two facilities in Arizona set to begin production in 2025 and 2028 and will utilize part of the new funding to construct a third facility, increasing its total investment from $40 billion to $65 billion.