Taiwan Semiconductor Manufacturing Co (TSMC) reported a strong second-quarter performance, significantly surpassing analysts’ expectations with a 40% increase in sales. This impressive growth is attributed to a boom in demand for advanced microchips, which are crucial for artificial intelligence (AI) technologies. The Hsinchu-based company, which is the exclusive supplier of highly advanced microchips used by tech giants Nvidia and Apple, recorded June revenue of NT$267.86 billion ($6.38 billion). This marks a notable 32.9% increase compared to its sales in June 2023.
Throughout the entire second quarter, TSMC generated NT$673.51 billion in revenue, representing a 40% rise from the NT$480.84 billion reported in the second quarter of the previous year. These robust sales figures contributed to a 2% increase in TSMC’s shares on the Taipei stock exchange during the morning session. TSMC’s shares have already gained 76% year-to-date, and the company’s valuation surpassed the $1 trillion mark earlier in the week.
The reported sales figures outperformed forecasts from analysts, with a FactSet poll of 25 analysts predicting NT$652.05 billion in sales for the three months from April to June. TSMC also exceeded its own guidance, generating $20.7 billion in second-quarter revenue compared to its previous estimate of $19.6 billion to $20.4 billion.
The surge in TSMC’s sales is driven by the rapid expansion of data centers and infrastructure needed to support AI technologies. This increasing demand for advanced chips has helped offset a slowdown in the broader semiconductor industry, which has been experiencing reduced demand for microchips used in consumer electronics and automobiles. TSMC’s leading position in the market is underscored by its 62% share of the global chip market in the first quarter of 2024, up from 61% in the fourth quarter of 2023, according to Counterpoint Research.
Looking ahead, TSMC expects to achieve operating margins between 40% and 42%, compared to the 42% margins it achieved in the first quarter of the year. Analysts at JPMorgan, led by Gokul Hariharan, suggested on July 7 that TSMC might raise its capital expenditure guidance to invest more heavily in the development of its N2 and N3 chips. This strategic investment would further solidify TSMC’s market position and ensure it continues to meet the growing demand for cutting-edge semiconductor technologies.
In summary, TSMC’s outstanding second-quarter performance, driven by the booming AI market, has not only exceeded expectations but also highlighted the company’s critical role in the global semiconductor industry. With continued investment in advanced chip technologies, TSMC is well-positioned to maintain its leadership and capitalize on future growth opportunities.