Taiwan Semiconductor Manufacturing Company (TSMC) is poised to see a significant boost in profits due to the surge in demand driven by the generative artificial intelligence boom. Analysts from FactSet predict that TSMC will report a net income of NT$236.4 billion, or $7.3 billion, in the second quarter of 2024. This represents a 30% increase compared to the same period last year, when the company reported a profit of NT$181.8 billion.
TSMC’s close partnerships with AI chip designer Nvidia and Apple have contributed to the company’s success, with its shares rising by 82.9% so far this year. The company will release its second-quarter earnings on Thursday. In June, TSMC reported a 30% year-over-year increase in net revenue for May, reaching $7.1 billion, although this was a slight decrease of 2.7% from April. From January to May, TSMC’s revenue increased by 27% year-over-year.
TSMC’s chairman and CEO, C.C. Wei, had earlier confirmed projections of a 10% growth in the chip market, excluding the memory sector, fueled by the AI market. In April, TSMC forecasted that its second-quarter sales could rise by up to 30%, driven by demand from clients such as Nvidia and Apple. The company’s expected second-quarter revenue range was set between $19.6 billion and $20.4 billion, surpassing earlier estimates of $19.1 billion.
TSMC also announced plans to maintain its investment budget of up to $32 billion for the year, primarily focusing on advanced technologies. Wendell Huang, senior vice president and chief financial officer of TSMC, noted in April that strong demand for the company’s 3nm and 5nm technologies would support its business, despite seasonal variances in smartphone demand.
In addition, TSMC secured $6.6 billion in grants from the federal CHIPS and Science Act earlier this year to support the development of its first major U.S. chipmaking hub in Phoenix. The company plans to use some of these funds to build a third chipmaking facility in Arizona, increasing its investment from $40 million to $65 million. Two current facilities in Arizona are expected to commence production in 2025 and 2028.