The headquarters of semiconductor maker TSMC, in Hsinchu, Taiwan, on Jan. 29, 2021. TSMC, a major Apple and Nvidia supplier, has benefited from the global AI boom.SAM YEH/Getty Images
Taiwan’s TSMC, the world’s largest contract chip maker, raised its full-year revenue forecast on Thursday given surging demand for chips used in artificial intelligence, and rejected the idea of a joint venture factory in the United States.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC), a major Apple Inc and Nvidia supplier, has benefited from the global AI boom that has helped it weather the tapering off of pandemic-led electronics demand.
The bellwether for the chip industry earlier on Thursday posted net profit that beat market expectations. It raised its 2024 revenue forecast to growth of slight to above the mid-20-per-cent range in U.S. dollar terms, versus a previous prediction of an increase in the low to mid-20-per-cent range.
“AI is so hot; right now everybody, all my customers, want to put AI functionality into their devices,” Chairman and CEO C.C. Wei told analysts and reporters at an earnings conference.
The company’s U.S.-listed shares rose 3.3 per cent in premarket trading following the results.
Its Taiwan-listed shares closed down 2.4 per cent before the earnings announcement, extending falls this week after U.S. Republican presidential candidate Donald Trump said that Taiwan “did take about 100 per cent of our chip business” and should pay the U.S. for its defence.
The United States has about 10 per cent of the world’s chip manufacturing capacity, down from 19 per cent in 2000, according to the Semiconductor Industry Association, a group representing the U.S. chip industry. Taiwan has about 18 per cent, down from 22 per cent in 2000.
TSMC is spending US$65-billion on three plants in the U.S. state of Arizona and has other new factories in operation or planning stages in Japan and Germany, which have partner investors.
Asked if TSMC would consider a joint venture in the United States following Trump’s comments, Wei said no.
“So far we did not change any of our original plans of expansion of our overseas fabs. We continue to expand in Arizona, in Kumamoto, and maybe in future in Europe. No change in our strategy. We continue in our current practice,” he added.
On whether TSMC has enough capacity to support the demand for chips, he said things were “very, very tight.”
“We are working very, very hard to get enough capacity to support my customers from now all the way to next year, to 2026.”
CFO Wendell Huang said supply for leading edge nodes, including its 3nm and 5nm, would remain very tight next year.
For the current quarter, TSMC said its revenue would increase by as much as 34 per cent, in a range of between US$22.4-billion to US$23.2-billion.
The company adjusted its capital expenditure plans for this year to between US$30-billion and US$32-billion, compared with a previous forecast of US$28-billion to US$32-billion.
TSMC’s April-June net profit climbed to $247.8-billion new Taiwan dollars (US$7.60-billion) from $181.8-billion new Taiwan dollars a year earlier.
The profit beat a $238.8-billion new Taiwan dollars estimate for the quarter ended June 30, according to an LSEG SmartEstimate drawn from 21 analysts. SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.
“Moving into the third quarter of 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies,” Huang said.
Second-quarter revenue at TSMC, Asia’s most valuable publicly listed company, rose by 33 per cent to US$20.8-billion, better than the company’s previous forecast of US$19.6-billion to US$20.4-billion.