Taiwan Semiconductor Manufacturing Co (TSMC), the leading producer of advanced chips for AI applications, is set to report a significant 40% increase in third-quarter profit on Thursday, driven by soaring demand for AI technology. Analysts forecast a net profit of T$298.2 billion ($9.27 billion) for the quarter ending September 30, based on estimates from 22 analysts compiled by LSEG SmartEstimate. This figure compares to a net profit of T$211 billion in the same quarter of 2023.
The world’s largest contract chipmaker, TSMC has seen robust revenue growth, outperforming market expectations, due to the rising demand for AI-driven products from major clients like Apple, Nvidia, AMD, Qualcomm, and Mediatek. “Most of TSMC’s major clients…are launching new products which heavily rely on TSMC’s advanced process technologies,” said Li Fang-kuo, chairman of President Capital Management. Li added that TSMC’s Q3 earnings are likely to exceed expectations significantly.
TSMC will provide updates on its outlook for the current quarter and the full year, including its capital expenditure plans, during its earnings call scheduled for 0600 GMT on Thursday. The company has been investing heavily in expanding its production capacity, including building three new plants in Arizona, U.S., with an investment of $65 billion. However, the company maintains that most of its manufacturing will remain in Taiwan.
Earlier this year, TSMC raised its full-year revenue forecast and adjusted its capital expenditure plans to a range of $30 billion to $32 billion, up from a previous estimate of $28 billion to $32 billion. The boom in AI has been a key driver of growth, pushing up TSMC’s stock price by 77% so far this year, outperforming the broader market’s 28% gain.
Despite its dominant position, TSMC faces limited competition. Intel, once a leader in the semiconductor industry, has struggled with mounting losses in its contract manufacturing unit, which it is expanding to compete with TSMC.
($1 = 32.1570 Taiwan dollars)
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