Taiwan Semiconductor Manufacturing Co. (TSMC) is forecasting revenue growth of as much as 30% in the upcoming quarter, driven by a surge in artificial intelligence (AI) development that is creating demand for its advanced chips. This positive outlook follows the company’s first profit increase in a year, which was fueled by strong AI demand that has boosted growth at the world’s largest contract chipmaker.
In the June quarter, TSMC anticipates revenue to be between $19.6 billion and $20.4 billion, higher than earlier estimates of around $19.1 billion. This growth is attributed to the rising demand for chips that accelerate AI development, which is helping to offset the impact of a slowdown in the smartphone market.
TSMC’s market value has increased significantly since October 2022, reflecting investors’ confidence in the company’s positioning to benefit from the global AI development trend. The company has set a capital expenditure budget of $28 billion to $32 billion for 2024. In the March quarter, TSMC recorded a 9% rise in net income to NT$225.5 billion ($7 billion), outperforming expectations.
Looking ahead, TSMC expects revenue to grow by at least 20% for the full year as the semiconductor market rebounds. However, there are concerns about the sustainability of current levels of AI chip demand and the broader global macroeconomic environment. Additionally, uncertainty in the Taiwan Strait poses risks to the company’s operations.
Despite these challenges, TSMC remains optimistic about the long-term prospects of AI-focused chips, with AI revenue growing at a rate of 50% annually. While some investors caution against overreliance on AI chip demand, others see potential for continued growth in this area. The company’s performance is closely monitored by investors and analysts seeking to navigate the rapidly evolving semiconductor industry landscape.
As an investor looking into this sector you should keep an eye on how companies like Nvidia Corp are driving demand for advanced chips and how they are positioning themselves within this trend.
Additionally you should also monitor how global macroeconomic factors such as inflation rates or geopolitical events such as tensions with China may impact TSMC’s operations or financial performance.
Finally it is important to keep track of any developments related to Taiwan Strait and their implications on supply chain management and operational risks for companies like TSMC.