TSMC second-quarter profit beats expectations as AI chip boom continues

Taiwan Semiconductor Manufacturing Firm on Thursday beat income and revenue expectations within the second quarter, as demand for superior chips utilized in AI purposes proceed to surge.

Listed here are TSMC’s second-quarter outcomes versus LSEG consensus estimates:

Income: 673.51 billion New Taiwan {dollars} ($20.82 billion), vs. NT$657.58 billion expectedNet earnings: NT$247.85 billion, vs. NT$238.8 billion anticipated

TSMC reported web income rose 40.1% from a 12 months in the past to NT$673.51 billion, whereas web earnings elevated 36.3% from a 12 months in the past to NT$247.85 billion. The agency guided second-quarter income to be between $19.6 billion and $20.4 billion.

Surging demand for superior chips utilized in AI purposes has boosted TSMC’s Taiwan-listed shares by almost 70% thus far this 12 months.

TSMC is the world’s fundamental producer of superior chips present in every part from smartphones to AI purposes, although rivals akin to Samsung and Intel have been attempting to problem its dominance. It counts Apple and Nvidia amongst its clientele.

The chip large at the moment produces 3-nanometer chips and plans to begin mass manufacturing of 2-nanometer chips in 2025. Sometimes, a smaller nanometer dimension yields extra highly effective and environment friendly chips. 

“The demand for generative AI is surging within the cloud and on the edge. TSMC’s N3 course of boasts good yield charges and well-managed manufacturing traces. The market is well-funded, and regional political components drive elevated demand for superior processes,” Brady Wang, affiliate director of Counterpoint Analysis, mentioned on Friday forward of the outcomes.

Wang mentioned the capability of the 3-nanometer course of is anticipated to greater than double in 2024 in comparison with the earlier 12 months.

Needham analysts on Monday mentioned they count on TSMC to lift its 2024 income progress goal, reiterating a “purchase” ranking and elevating the value goal to $210 from $168 on the chip large’s U.S.-listed shares.

“We count on TSMC to lift its 2024 income progress outlook from ‘low- to mid-20s’ to ‘mid- to high-20s’ however preserve its 2024 [capital expenditures] goal at $30 billion on the upcoming earnings name,” Needham mentioned in a word.

TSMC held 62% of world foundry market share within the first quarter, up from 59% in the identical interval a 12 months in the past, based on Counterpoint Analysis knowledge.

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