In the second quarter, Taiwan Semiconductor Manufacturing Company (TSMC) surpassed revenue and profit expectations as the demand for advanced chips utilized in AI applications continued to grow significantly.
The company reported a 40.1% year-on-year increase in net revenue to NT$673.51 billion, surpassing LSEG consensus estimates of NT$657.58 billion. Net income also rose by 36.3% year-on-year to NT$247.85 billion, beating estimates of NT$238.8 billion. For the second quarter, TSMC projected revenue between $19.6 billion and $20.4 billion.
Chairman and CEO C.C. Wei attributed the second-quarter performance to robust demand for the company’s leading 3-nanometer and 5-nanometer technologies, despite the impact of smartphone seasonality.
The surge in AI chip demand has strained chip supplies globally, with TSMC being a key producer of advanced chips for smartphones and AI applications, serving clients like Apple and Nvidia.
Wei expressed challenges in balancing supply and demand due to the high levels of demand, aiming to achieve equilibrium by 2025 or 2026.
TSMC anticipates a strong third quarter driven by smartphone and AI-related demand, projecting revenue between $22.4 billion and $23.2 billion. The company foresees 2024 as a year of significant growth, with plans to start mass production of 2-nanometer chips in 2025.
The ongoing demand for generative AI, strong market funding, and geopolitical factors are driving the need for advanced processes. TSMC is advancing well in the development of 2-nanometer technology, with expectations to double the capacity of the 3-nanometer process in 2024.
According to Counterpoint Research data, TSMC’s dominance in the global foundry market has increased to 62% in the first quarter, up from 59% a year ago.
