TSMC's Growth Driven by AI Chip Demand and Key Partnerships
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Taiwan's TSMC reports new monthly high of NT$256 billion for July revenue | Taiwan News | Aug. 9, 2024 17:00
TAIPEI (Taiwan News) -- Taiwan Semiconductor Manufacturing Company (TSMC) said Friday (Aug. 9) its July revenue was NT$256 billion (US$7.9 billion), setting a new monthly high. According to a company press release on Friday (Aug. 9), cumulative revenue for the first seven months of 2024 was NT$1.523 trillion, a 30.5% increase compared to the same period last year. TSMC said it expects strong demand for advanced process technology driven by AI and smartphones, per CNA. This demand will push TSMC's Q3 revenue to between US$22.4 billion and US$23.2 billion, the company added, per Liberty Times. Analysts said the main drivers behind TSMC's July revenue were Apple's new product stockpiling and demand from Nvidia. They estimate that TSMC's revenue for August and September will remain high, ranging between NT$235.6 billion and NT$248.6 billion. TSMC added it is optimistic that its revenue will grow by 24% to 26% this year, significantly outpacing the 10% growth rate of the semiconductor industry, excluding memory.
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TSMC shatters records with July surge fueled by Apple, Intel, and Nvidia orders
TSMC demonstrated strong growth momentum in July 2024 amidst the slow recovery of the semiconductor market. The growth is fueled by increased orders from major clients, such as Apple for its new iPhone, as well as Intel, Nvidia, Qualcomm, and MediaTek. TSMC's consolidated revenue for July reached approximately NT$256.95 billion (US$7.91 billion), marking a 23.6% increase from June and a significant 44.7% rise from the same period in 2023, setting a new monthly record. Prospective growth From January to July 2024, TSMC's cumulative revenue totaled approximately NT$1.52 trillion, reflecting a substantial 30.5% increase from the same period in 2023, also setting a record high for this timeframe. TSMC's second-quarter performance exceeded financial forecasts. During the July earnings call, the company expressed confidence in continued strong demand for its advanced 5nm and 3nm process technologies, driven by mobile and AI-related opportunities. TSMC projected third-quarter revenue to reach between US$22.4 billion and US$23.2 billion, representing a quarter-on-quarter growth of 7.58% to 11.43%. Assuming an exchange rate of US$1 to NT$32.5, this translates to an estimated NT$728 billion to NT$754 billion. The company also forecasted a gross margin of 53.5% to 55.5% and an operating margin of 42.5% to 44.5%, with lower bounds exceeding the second quarter's gross margin of 53.2% and operating margin of 42.5%. For the full year of 2024, TSMC expects the global semiconductor market (excluding memory) to grow by approximately 10%. Over the past three months, TSMC has observed stronger demand from customers for AI and high-end mobile devices, leading to increased capacity utilization for its 3nm and 5nm process technologies in the second half of 2024. TSMC anticipates robust growth for the year and has raised its full-year revenue outlook. In US dollar terms, TSMC forecasts revenue growth for 2024 to slightly exceed the mid-twenties percentage range (24-26%), returning to a growth trajectory and reaching new highs. Market optimism suggests that TSMC's full-year revenue in US dollars may outperform financial forecasts, potentially achieving a 30% year-over-year growth. New plant incoming Following its expansions in the US and Japan, TSMC plans to hold a groundbreaking ceremony for its new European Semiconductor Manufacturing Company (ESMC) plant in Dresden, Germany, on August 20. Construction is expected to begin by the end of 2024. Additionally, TSMC addressed a recent patent infringement lawsuit filed against the company by Advanced Integrated Circuit Process LLC (AICP), a US-registered company, in the Eastern District of Texas. TSMC stated that it invests billions of dollars annually in independently developing industry-leading patent technologies (with US$5.8 billion invested in 2023 alone). The company described the lawsuit as a typical case of "patent trolling" and confirmed that the matter is now in legal proceedings, with TSMC committed to defending its technology through the judicial process.
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Taiwan Semiconductor Manufacturing Co. (TSMC) reports strong growth in Q2 2023, fueled by AI chip demand and partnerships with tech giants like Apple, Intel, and Nvidia. The company's advanced 3nm process is set to boost future revenues.
TSMC Reports Robust Q2 2023 Performance
Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, has reported impressive financial results for the second quarter of 2023. The company's net profit surged by 23.3% year-on-year, reaching NT$181.8 billion (US$5.71 billion)
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. This strong performance can be attributed to the growing demand for artificial intelligence (AI) chips and TSMC's strategic partnerships with major tech companies.AI Chip Demand Fuels Growth
The increasing adoption of AI technologies across various industries has significantly boosted the demand for high-performance chips. TSMC, being a key player in the semiconductor industry, has benefited greatly from this trend. The company's advanced manufacturing processes, particularly its 3-nanometer (3nm) technology, have positioned it as a preferred partner for AI chip production
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.Strategic Partnerships Drive Success
TSMC's growth is further propelled by its collaborations with tech giants such as Apple, Intel, and Nvidia. These partnerships have not only contributed to the company's current success but also promise sustained growth in the future:
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Apple: As a long-standing customer, Apple relies on TSMC for manufacturing chips for its iPhones and other devices. The upcoming iPhone 15 series is expected to feature chips produced using TSMC's advanced 3nm process
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Intel: The partnership with Intel involves producing chips for various applications, including CPUs and GPUs. This collaboration is set to expand as Intel increases its outsourcing to TSMC
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Nvidia: As a leader in AI and graphics processing units (GPUs), Nvidia's reliance on TSMC for chip production has significantly contributed to the chipmaker's growth, especially in the AI sector
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Advanced 3nm Process: A Game-Changer
TSMC's 3nm process technology is poised to be a major driver of future growth. This cutting-edge manufacturing process offers improved performance and energy efficiency compared to previous generations. The company expects its 3nm-based chip production to ramp up in the second half of 2023, with projections indicating that it will account for 4-6% of TSMC's total wafer revenue by the end of the year
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.Financial Outlook and Market Position
Despite facing some headwinds in the broader tech industry, TSMC maintains a positive outlook for the future. The company's Q2 2023 revenue reached NT$480.13 billion (US$15.09 billion), marking a 3.6% increase from the previous quarter
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. This growth, coupled with the anticipated ramp-up of 3nm production, positions TSMC favorably in the competitive semiconductor market.As the demand for AI chips continues to grow and TSMC's partnerships with industry leaders strengthen, the company is well-positioned to maintain its dominance in the global semiconductor manufacturing landscape. The success of its advanced manufacturing processes, particularly the 3nm technology, will likely play a crucial role in shaping the future of AI and high-performance computing.
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