TSMC's third-quarter profit rose 40% on strong demand for AI chips

Kathleen William October 14, 2024

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co (TSM, 2330.TW), the main maker of advanced chips for artificial intelligence applications, is expected to report a 40% jump in third-quarter profit on Thursday thanks to rising demand.

The world's largest contract chipmaker, whose customers include Apple (AAPL) and Nvidia (NVDA), has benefited from the trend toward AI.

TSMC will report net income of T$298.2 billion ($9.27 billion) for the quarter ending September 30, according to an LSEG SmartEstimate compiled by 22 analysts. SmartEstimates give greater weight to forecasts from analysts that are more consistent.

This estimate compares with third quarter 2023 net income of T$211 billion.

TSMC last week reported an increase in third-quarter revenue expressed in Taiwan dollars, significantly beating market expectations. The company announces its revenue guidance in U.S. dollars at its earnings conference call.

“Most of TSMC's major customers, including Apple, Nvidia, AMD (AMD), Qualcomm (QCOM) and Mediatek (2454.TW), are launching new products that rely heavily on TSMC's advanced process technologies,” Li said Fang-kuo, Chairman of President Capital Management.

“TSMC's third quarter earnings will far exceed expectations,” Li added.

TSMC will update its outlook for the current quarter and full year, including its capital expenditures as it expands production, during its quarterly earnings conference call at 06:00 GMT on Thursday.

TSMC is spending billions building new factories overseas, including $65 billion on three plants in Arizona, although most production will remain in Taiwan.

An aerial photo shows the factory of Taiwan Semiconductor Manufacturing Company (TSMC) in Nanjing, Jiangsu province, China, August 1, 2023. TSMC announced on March 8, 2024 that its consolidated revenue for February 2024 was about NT$181.65 billion fraud. This represents a decrease of 15.8% month-on-month but an increase of 11.3% year-on-year. Cumulative revenue from January to February 2024 was approximately NT$397.43 billion, an increase of 9.4% compared to the same period last year. (Photo by Costfoto/NurPhoto via Getty Images) — TSMC's factory in Nanjing, Jiangsu Province, China. (Costfoto/NurPhoto via Getty Images) (NurPhoto via Getty Images)

In its last earnings release in July, TSMC raised its full-year revenue forecast and adjusted its capital expenditure plans for this year to between $30 billion and $32 billion, compared with a previous forecast of $28 billion to $32 billion.

The AI boom has helped drive up the share price of Asia's most valuable company: Taipei-listed TSMC shares have risen 77% so far this year, compared with a 28% gain for the broader market.

Hsinchu-based TSMC, colloquially referred to as the “holy mountain protecting the country” because of its crucial role in Taiwan's export-oriented economy, has little competition.

Five-decade-old Intel (INTC), once the dominant force in the semiconductor industry, is facing one of its worst times as losses mount at the contract manufacturing unit it is building in hopes of challenging TSMC.

(Reporting by Ben Blanchard and Faith Hung; Editing by Christopher Cushing)