TSMC lifts annual revenue forecast, rejects US joint venture
Taiwanese chipmaker struggles to support demand for chips used in artificial intelligence
18 July 2024 - 15:28
byYimou Lee, Ben Blanchard and Faith Hung
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Taipei — Taiwan’s Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, raised its full-year revenue forecast on Thursday given surging demand for chips used in artificial intelligence (AI), and rejected the idea of a joint venture factory in the US.
TSMC, a major Apple 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 slightly above the mid-20% range in US dollar terms, versus a previous prediction of an increase in the low to mid-20% range.
“AI is so hot; right now everybody, all my customers, want to put AI functionality into their devices,” chair and CEO CC Wei told analysts and reporters at an earnings conference.
The company’s US-listed shares rose 3.3% in pre-market trading after the results.
Its Taiwan-listed shares, however, closed down 2.4% before the earnings announcement, extending falls this week after US Republican presidential candidate Donald Trump said that Taiwan “did take about 100% of our chip business” and should pay the US for its defence.
TSMC is spending $65bn on three plants in the US 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 US after 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 said.
On whether TSMC has enough capacity to support the demand for chips, he said things were “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.
SMARTPHONE CHIPS DEMAND
For this quarter, TSMC said its revenue would increase by as much as 34%, in a range of $22.4bn-$23.2bn.
The company adjusted its capital expenditure plans for this year to $30bn-$32bn compared with a previous forecast of $28bn-$32bn.
TSMC’s April-June net profit climbed to 247.8-billion Taiwan dollars ($7.60bn) from T$181.8bn a year earlier.
The profit beat a T$238.8bn 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 33% to $20.8bn, better than the company’s previous forecast of $19.6bn-$20.4bn.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
TSMC lifts annual revenue forecast, rejects US joint venture
Taiwanese chipmaker struggles to support demand for chips used in artificial intelligence
Taipei — Taiwan’s Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, raised its full-year revenue forecast on Thursday given surging demand for chips used in artificial intelligence (AI), and rejected the idea of a joint venture factory in the US.
TSMC, a major Apple 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 slightly above the mid-20% range in US dollar terms, versus a previous prediction of an increase in the low to mid-20% range.
“AI is so hot; right now everybody, all my customers, want to put AI functionality into their devices,” chair and CEO CC Wei told analysts and reporters at an earnings conference.
The company’s US-listed shares rose 3.3% in pre-market trading after the results.
Its Taiwan-listed shares, however, closed down 2.4% before the earnings announcement, extending falls this week after US Republican presidential candidate Donald Trump said that Taiwan “did take about 100% of our chip business” and should pay the US for its defence.
TSMC is spending $65bn on three plants in the US 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 US after 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 said.
On whether TSMC has enough capacity to support the demand for chips, he said things were “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.
SMARTPHONE CHIPS DEMAND
For this quarter, TSMC said its revenue would increase by as much as 34%, in a range of $22.4bn-$23.2bn.
The company adjusted its capital expenditure plans for this year to $30bn-$32bn compared with a previous forecast of $28bn-$32bn.
TSMC’s April-June net profit climbed to 247.8-billion Taiwan dollars ($7.60bn) from T$181.8bn a year earlier.
The profit beat a T$238.8bn 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 33% to $20.8bn, better than the company’s previous forecast of $19.6bn-$20.4bn.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.