Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has posted a record-breaking profit for the third quarter of 2024, signaling a strong surge in demand for artificial intelligence (AI) hardware. The company’s latest earnings report shows that the global appetite for advanced chips is still growing, calming market fears about the sustainability of the AI boom.
Soaring Profits and Revenue Growth
TSMC reported an impressive net income of 352.3 billion Taiwanese dollars ($10.1 billion) for the July-September quarter, a 54% increase compared to the same period last year. This result not only surpassed market expectations but also set a new high for the company. Revenue rose to $23.5 billion for the quarter, reflecting a 36% year-on-year increase.
TSMC’s leadership expressed confidence that this growth is only the beginning. “The demand for AI chips is real and expanding rapidly,” said CEO C.C. Wei during the company’s earnings call. “We’re seeing deeper and broader growth than anyone else in the industry.” TSMC now projects its annual revenue to grow by nearly 30%, with expectations of continued strong performance in the final quarter of the year.
Riding the AI Wave
TSMC’s success is largely driven by demand for its cutting-edge 3nm and 5nm chip technologies, which power AI applications and smartphones alike. As companies worldwide rush to adopt AI infrastructure, TSMC remains a key player in this rapidly evolving landscape. The company counts tech giants like Nvidia and Apple among its biggest clients, and their stock prices also surged following TSMC’s stellar performance—Nvidia by 3% and Apple by 2%.
A Strategic Shift in Global Manufacturing
TSMC’s growth is not limited to Taiwan. To meet increasing global demand, the chipmaker is expanding its manufacturing footprint beyond Asia. With a $65 billion investment in three chip plants in Arizona and the opening of its first factory in Japan earlier this year, TSMC is positioning itself to serve key markets like the U.S. and Europe. The company’s investments also reflect its commitment to navigating geopolitical complexities, ensuring business continuity regardless of international tensions.
AI Demand vs. Market Skepticism
While TSMC’s bullish outlook has reassured investors, some market participants remain cautious. Earlier this week, Dutch semiconductor equipment maker ASML reported slower-than-expected orders, raising concerns about whether the AI boom could lose momentum. However, TSMC’s management remains optimistic, pointing to strong orders from hyperscalers—companies like Microsoft and Amazon that are building their own AI infrastructure.
“Many AI innovators are working with us, and we believe this trend will continue for the foreseeable future,” Wei said.
Looking Ahead
TSMC has raised its revenue forecast for 2024, expecting a 30% growth in U.S. dollar terms, up from an earlier projection of around 25%. Capital expenditure for the year is expected to exceed $30 billion, with plans to increase investments further in 2025.
With shares up over 70% this year, TSMC is outperforming many of Asia’s biggest tech firms. Its recent results suggest that the AI boom is still in full swing, offering bright prospects not only for the company but also for the broader semiconductor industry.
As TSMC powers ahead, it remains a company to watch in the ongoing AI revolution, paving the way for innovations that will shape the future. Stay with World View Today for the latest updates on the global tech landscape.
