TSMC Hikes Revenue Outlook in a Show of Confidence on AI Boom

Taiwan Semiconductor Manufacturing Co. raised its projections for full-year revenue growth after results beat estimates, riding a global wave of spending on AI.

The chipmaker for Apple Inc. and Nvidia Corp. now expects sales to grow more than the maximum mid-20% it had guided toward previously. TSMC expects revenue of as much as $23.2 billion this quarter, above analysts’ projections. And it narrowed its forecast for capital spending — a key indicator of where TSMC sees future demand — to the high end of its original forecast, to $30 billion to $32 billion from as low as $28 billion previously.

The raised outlook conveys TSMC’s confidence in the longevity of an AI boom that began in late 2022 with the advent of OpenAI’s ChatGPT. That spurred global tech giants from Microsoft Corp. to Baidu Inc. to splurge on AI infrastructure, largely powered by Nvidia accelerators.

Market expectations had risen in the weeks leading up to TSMC’s report. The wider smartphone market — another big driver for Taiwan’s largest company — is on a path to recovery. Apple provided an upbeat guidance to suppliers on shipments of its upcoming iPhone 16, based on the potential strength of its new AI services. That helped TSMC report a better-than-anticipated 36% rise in June-quarter profit.

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Net income rose to NT$247.8 billion ($7.6 billion), after the company disclosed its second-quarter sales grew at the fastest pace since 2022.

Shares of the world’s largest maker of advanced chips have more than doubled since the AI boom took off in late 2022, and hit a series of all-time highs as the firm’s market capitalization briefly crossed the $1 trillion mark.

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What Bloomberg Intelligence Says

ASML’s 23.7% jump in order bookings in 2Q suggests TSMC’s N2 development is proceeding healthily, potentially accelerating capacity buildup. TSMC is scheduled to start mass production in 2H25, starting with an approximate 30,000-wafer monthly capacity in Hsinchu, Taiwan. Its N2 process will be priced at least 15% higher than N3, we believe.

— Charles Shum, BI analyst

Still, investor euphoria over TSMC’s prospects diminished Wednesday after Bloomberg Businessweek published comments by US Republican presidential nominee Donald Trump, who said he’s at best lukewarm about defending Taiwan in the event of Chinese aggression.

On top of that, the US is also mulling stricter chip curbs on China, Bloomberg News reported, triggering a global tech stock selloff as investors pondered the fallout for the world’s largest semiconductor arena.

Caution about AI is now emerging in corners of the market. This month, Goldman Sachs warned that the biggest US tech firms may be spending too much on AI.

Before the results, SemiAnalysis’s Chaolien Tseng had warned that TSMC’s stock may take a hit if it didn’t lift its 2024 revenue growth to at least 25%.

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