TSMC exceeds profit forecast, sees continued AI-driven growth
The TSMC logo is seen at the TSMC Museum of Innovation, Hsinchu, Taiwan, May 29, 2024. (Reuters Photo)


TSMC, the world's largest contract chipmaker, said on Thursday it expects strong growth in its business to be sustained as it reported a forecast-beating 54% jump in quarterly profit due to soaring demand for chips used in artificial intelligence (AI).

Taiwan Semiconductor Manufacturing Co., the dominant producer of advanced chips used in AI applications whose customers include Apple and Nvidia, has benefited from a surge towards AI across a spectrum of industries.

At its quarterly earnings call on Thursday, TSMC said it expects capital expenditure for this year at slightly higher than $30 billion, compared with a previous forecast of $30 billion-$32 billion, as it races to expand production.

The chipmaker is spending billions of dollars building new factories overseas, including $65 billion on three plants in the U.S. state of Arizona, though it has said most manufacturing will remain in Taiwan.

It said on Thursday it expects its first fab in Arizona to see volume production in 2025, while its second fab there should start volume production in 2028. It forecasts the third Arizona fab to begin volume production by the end of the decade.

It forecast fourth-quarter revenue of $26.1 billion-$26.9 billion, up from $19.62 billion in the same period of 2023.

The bellwether for the chip industry reported earlier on Thursday a net profit of NT$325.3 billion ($10.11 billion) for the quarter ended Sept. 30, its highest for any quarter, compared with the NT$300.2 billion predicted by an LSEG SmartEstimate drawn from 22 analysts. SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.

TSMC, Asia's most valuable publicly listed company, said third-quarter revenue rose 36% year-on-year to $23.5 billion, better than the company's previous forecast of $22.4 billion to $23.2 billion. The company last week announced third-quarter revenue in Taiwan dollars, coming in at NT$759.69 billion.

Capital expenditure in the third quarter was $6.4 billion, TSMC said, compared with $6.36 billion in the second quarter.

On Tuesday, ASML, the world's biggest chipmaking equipment supplier to companies including TSMC, forecast lower-than-expected 2025 sales and bookings on sustained weakness in parts of the chip market, pushing the Dutch firm's shares to their biggest one-day drop since 1998.

The second half of the year is traditionally the peak season for Taiwanese tech companies as they race to supply customers ahead of the year-end holiday season in major Western markets.

The AI boom has helped drive up TSMC shares, with its Taipei-listed stock leaping 75% so far this year, compared with a 28% gain for the broader market, giving it a market capitalization of around $840 billion.

TSMC, colloquially referred to in Taiwan as the "sacred mountain protecting the country" for its critical role in Taiwan's export-dependent economy, faces little competition, though both Intel and Samsung are trying to challenge its dominance.