TSMC, the world's largest contract chipmaker, is betting on continued strong growth after it reported a better-than-forecast 54 percent rise in quarterly profit on Thursday, driven by rising demand for artificial intelligence (AI) chips.

Taiwan Semiconductor Manufacturing Co, the leading maker of advanced chips for AI applications whose customers include Apple and Nvidia, has benefited from the increasing adoption of AI across numerous industries.

TSMC estimated that its capital spending would more than double to about $11.5 billion in the current quarter and that its budget would likely increase further next year as the company expects healthy demand for its products.

It said full-year 2024 revenue would grow nearly 30 percent in U.S. dollars, compared with an earlier forecast of just above the mid-20 percent range.

AI processor revenue is expected to account for a mid-teens percentage of total revenue this year, according to TSMC.

“The demand is real,” Chairman and CEO CC Wei said in an earnings conference call. He referred to AI and added that it will be around for many years.

The company's robust performance and outlook underscore continued strong demand for AI after some industry observers expressed doubts after ASML, the world's largest supplier of chip-making equipment, gave lower-than-expected 2025 revenue guidance earlier this week.

Shares of US chipmakers such as AI processor leader Nvidia and rival AMD rose more than 2.5 percent in premarket trading. Shares of Broadcom, Micron Technology, Intel and Qualcomm rose between 1.5 and 3 percent.

U.S.-listed TSMC shares rose more than 8 percent, with the company's market capitalization expected to top $1 trillion if premarket gains continue.

In its quarterly earnings call on Thursday, TSMC said it expected capital spending of just over $30 billion this year, compared with a previous forecast of $30 billion to $32 billion, as the company looks to expand production.

Capital spending for 2025 is expected to be higher than this year, TSMC said, but did not provide figures.

It said next year would be “healthy” and predicted a similar outlook for the next five years.

Piter Yang, a fund manager at Fuh Hwa Securities Investment Trust, said TSMC's results had allayed concerns about the industry raised by ASML's earnings.

“TSMC is a dominant company,” he said. “It is the only one with advanced process technologies that are not available from companies like Intel or Samsung.”

TSMC is spending tens of billions of dollars building new factories overseas, including $65 billion on three plants in the US state of Arizona, although the company has said most production will remain in Taiwan.

On Thursday, the company said it expects its first factory in Arizona to begin mass production in 2025, while the second factory there is expected to begin mass production in 2028. The third factory in Arizona is predicted to begin mass production by the end of the decade.

The Taiwanese chipmaker said it expects fourth-quarter revenue of $26.1 billion to $26.9 billion, up from $19.62 billion in the same period in 2023.

The chip industry leader on Thursday reported net profit of T$325.3 billion ($10.11 billion) for the quarter ended September 30, the highest of any quarter, compared with T$300.2 billion , which were forecast in an LSEG SmartEstimate analysis by 22 analysts. SmartEstimates give greater weight to forecasts from analysts that are more consistent.

TSMC, Asia's most valuable listed company, said third-quarter revenue rose 36 percent year-on-year to $23.5 billion, better than the company's previous forecast of $22.4 billion to $23.2 billion US dollars. The company last week reported third-quarter sales in Taiwan dollars of T$759.69 billion.

“Our third quarter business was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” TSMC CFO Wendell Huang said in a conference call. “For the fourth quarter of 2024, we expect our business to continue to be supported by strong demand for our leading process technologies.”

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

According to TSMC, capital spending was $6.4 billion in the third quarter, compared to $6.36 billion in the second quarter.

The AI ​​boom has helped drive TSMC shares higher: The Taipei-listed stock is up 75 percent so far this year, compared with a 28 percent gain for the broader market, giving the company a market capitalization of around 840 billion US dollars.

TSMC, colloquially referred to in Taiwan as the “holy mountain protecting the country” because of its crucial role in Taiwan's export-dependent economy, has little competition, although both Intel and Samsung are trying to challenge its dominance.