(Bloomberg) — Taiwan Semiconductor Manufacturing Co. raised its full-year revenue growth forecast after results beat estimates, riding a global wave of spending on artificial intelligence.
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The chipmaker for Apple Inc. and Nvidia Corp. now expects sales to grow more than the mid-20% it previously forecast. TSMC expects revenue of $23.2 billion this quarter, beating analysts’ expectations. It also trimmed its capital spending forecast — a key indicator of where TSMC sees future demand — to the upper end of its original forecast, to $30 billion to $32 billion from $28 billion previously.
The high expectations reflect TSMC’s confidence in the longevity of the AI ​​boom that began in late 2022 with the emergence of OpenAI’s ChatGPT. That has spurred global tech giants from Microsoft Corp. to Baidu Inc. to splurge on AI infrastructure, largely powered by Nvidia accelerators.
Market expectations have been rising in the weeks leading up to TSMC’s report. The broader smartphone market — another big driver for Taiwan’s largest company — is on track to recover. Apple gave suppliers upbeat guidance on shipments of the upcoming iPhone 16, citing the potential strength of new AI services. That helped TSMC report a better-than-expected 36% jump in second-quarter earnings.
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Net income rose to NT$247.8 billion ($7.6 billion), after the company reported second-quarter sales growth at the fastest pace since 2022.
Shares of the world’s largest advanced chipmaker have more than doubled since the start of the artificial intelligence boom in late 2022, hitting a series of all-time highs as the company’s market value briefly crossed the $1 trillion mark.
What does Bloomberg News say?
ASML’s 23.7% increase in order bookings in Q2 suggests that TSMC’s N2 development is progressing well, which could accelerate capacity build. TSMC is scheduled to start mass production in the second half of 2025, starting with an approximate monthly production capacity of 30,000 wafers in Hsinchu, Taiwan. We believe that the price of its N2 process will be at least 15% higher than N3.
— Charles Shum, Business Intelligence Analyst
However, investor optimism about Taiwan’s chipmaker’s prospects waned on Wednesday after Bloomberg Businessweek published comments from Republican presidential candidate Donald Trump, who said he was at best lukewarm about defending Taiwan in the event of Chinese aggression.
Furthermore, the U.S. is also considering imposing tighter restrictions on chip imports from China, according to Bloomberg News, leading to a global sell-off in technology stocks as investors wonder about the implications for the world’s largest semiconductor market.
The market is starting to become more cautious about AI. This month, Goldman Sachs warned that the biggest US tech companies may be spending too much on AI.
Ahead of the results, SemiAnalysis’ Zhaolin Zeng warned that TSMC shares could take a hit if it doesn’t lift its 2024 revenue growth to at least 25%.
–With assistance from Vlad Savov, Cindy Wang, Mayumi Negishi, and Liao Wei-Sing.
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