Taiwan Semiconductor Manufacturing Co (TSMC), the primary producer of advanced chips for artificial intelligence applications, is expected to report a 30% increase in second-quarter profit on Thursday, driven by soaring demand.
TSMC, the world’s largest contract chipmaker with clients including Apple and Nvidia, has benefited from the surge in AI, pushing its stock and the broader Taiwan market to record highs. Recently, its American Depositary Receipts surpassed a trillion-dollar market value.
For the quarter ended June 30, TSMC is projected to report a net profit of T$236.1 billion ($7.25 billion), according to a SmartEstimate from LSEG based on forecasts from 20 analysts, which gives greater weight to the most consistently accurate analysts. This compares to the second-quarter net profit of T$181.8 billion in 2023.
TSMC recently reported a significant rise in second-quarter revenue, exceeding market expectations.
“I expect the third quarter outlook for all of their products to be very good,” said Li Fang-kuo, Chairman of President Capital Management Co.
At its quarterly earnings call at 0600 GMT on Thursday, TSMC will provide updates on its outlook for the current quarter and the full year, including its capital expenditure as it expands production.
TSMC is investing billions in new factories overseas, including $65 billion on three plants in Arizona, though it maintains that most manufacturing will remain in Taiwan.
In its last earnings call in April, TSMC maintained its capital spending guidance for this year at $28 billion to $32 billion, compared to last year’s $30.45 billion, with 70% to 80% allocated to advanced technologies.
“TSMC could raise their capital spending,” said Chu Yen-min, Chairman of KGI Securities Investment Advisory Co. “There are many positive factors that will help their stock price and support the broader market.”
The AI boom has significantly boosted the share price of Asia’s most valuable company, with TSMC’s Taipei-listed stock rising 75% this year to historic highs, compared to a 33% gain for the broader market.
TSMC, often referred to as the “sacred mountain protecting the country” for its crucial role in Taiwan’s export-dependent economy, faces little competition, though Intel and Samsung are attempting to challenge its dominance.
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