TSMC is set to report strong profits driven by AI boom, as demand for advanced chips soars across industries. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading producer of advanced chips for artificial intelligence (AI) applications, is expected to announce a 42% increase in its third-quarter profit, driven by strong AI demand. This performance follows the rapid rise in AI technology adoption across various industries.
According to analysts, TSMC’s net profit for the quarter ending September 30 is projected to reach T$300.1 billion ($9.33 billion), based on estimates compiled by LSEG SmartEstimate. This represents a significant leap from T$211 billion in the same period last year.
The global AI boom supports TSMC’s strong financial performance, with key customers like Apple and Nvidia contributing to its success. With customers like Apple and Nvidia, TSMC is set to report strong profits driven by AI boom in its latest financial results. As more industries integrate AI into their operations, the need for advanced chips has skyrocketed, benefitting TSMC as the world’s largest contract chipmaker.
Last week, TSMC exceeded market expectations with its Taiwan-dollar-denominated third-quarter revenue. The company will provide its fourth-quarter revenue outlook in U.S. dollars during its upcoming earnings call.
TSMC reported a 54% increase in quarterly profit on Thursday, beating expectations. The company also raised its full-year revenue forecast, now expecting a nearly 30% increase in U.S. dollar terms. Revenue from AI processors is projected to make up a significant portion of overall earnings, reaching the mid-teens percentage of total revenue for 2024.
Chairman and CEO C.C. Wei highlighted the sustained demand for AI technology, stating that the trend will continue for many years. This optimistic outlook contrasts with the recent caution expressed by ASML.
Market Volatility in the Chipmaking Industry
Despite TSMC’s strong position, shares of the company fell 2.3% on Wednesday, closing at T$1,045, not far from its record high of T$1,080 set in July. The decline followed a warning from ASML, the largest supplier of chipmaking equipment, which lowered its 2025 sales forecast due to ongoing weakness in parts of the chip market. ASML’s statement led to a sharp drop in its stock, its worst single-day decline since 1998.
Analysts predict that TSMC is set to report strong profits driven by the AI boom, thus reflecting the company’s dominant position in the chipmaking industry. TSMC is aggressively expanding its production capacity to meet growing demand. The company is investing heavily in overseas facilities, including $65 billion for three new plants in Arizona, U.S. However, the majority of its manufacturing operations will remain in Taiwan.
During its July earnings call, TSMC revised its full-year revenue forecast upward and adjusted its capital expenditure budget for 2024 to between $30 billion and $32 billion, compared to a previous range of $28 billion to $32 billion.
The second half of the year is traditionally a peak period for Taiwanese tech companies, as they rush to meet holiday season demand in major Western markets. This seasonal trend, coupled with the AI surge, has driven up TSMC’s stock by 76% this year, compared to a 28% gain in the broader market.
Capital Expenditure on the Rise
TSMC announced that its capital expenditure for the current quarter would rise to $11.5 billion, more than doubling previous estimates. The company expects further increases in capital spending next year, driven by the robust demand for its products.
Looking ahead, TSMC’s management forecasts strong growth for the next five years, with 2025 likely to see even higher capital expenditures. These results have alleviated concerns in the chip industry, which had been unsettled by ASML’s earlier earnings report.
Piter Yang, a fund manager at Fuh Hwa Securities Investment Trust, emphasized TSMC’s continued dominance, stating, “TSMC’s advanced technology gives it a significant advantage that cannot be matched by competitors like Intel or Samsung.”
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