Taiwan Semiconductor Manufacturing Company (TSMC) is poised to see a significant boost in profits, with analysts predicting a 30% year-over-year increase driven by high demand amid the generative artificial intelligence boom. TSMC, which produces most of the world’s advanced chips, is expected to report a net income of NT$236.4 billion ($7.3 billion) for the second quarter of 2024, up from NT$181.8 billion the previous year.
The chipmaker enjoys an exclusive partnership with AI chip designer Nvidia and also fabricates chips for Apple. So far this year, TSMC shares have surged by 82.9%. Earnings for the second quarter are set to be reported on Thursday.
In June, TSMC announced that its net revenue in May rose by 30% year-over-year to $7.1 billion, though this figure represented a 2.7% decrease from April. Despite this, the company’s revenue from January through May increased by 27% compared to the same period last year. Earlier, TSMC chairman and CEO C.C. Wei had reaffirmed projections that the chip market, excluding the memory sector, would grow by 10% this year due to the AI boom.
In April, TSMC forecasted a potential 30% rise in second-quarter sales, attributing the growth to key customers like Nvidia and Apple. The company set its second-quarter revenue expectations between $19.6 billion and $20.4 billion, surpassing the earlier estimate of $19.1 billion. TSMC also plans to maintain its spending cap at $32 billion for the year, primarily invested in advanced technologies.
Wendell Huang, TSMC’s senior vice president and CFO, stated in April, “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.”
Additionally, TSMC received $6.6 billion in grants from the federal CHIPS and Science Act earlier this year to support its major U.S. chipmaking hub in Phoenix. TSMC has two chipmaking facilities in Arizona set to commence production in 2025 and 2028 and will use some of the new funding to build a third facility, raising the company’s investment from $40 million to $65 million.