TSMC Outlook Beats Estimates as AI Demand Helps Propel Business

(Bloomberg) — Taiwan Semiconductor Manufacturing Co. expects revenue to rise as much as about 30% this quarter, reflecting a boom in AI development that’s boosting demand for the advanced chips it makes for the likes of Nvidia Corp.

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The better-than-projected outlook follows its first profit rise in a year, after strong AI demand revived growth at the world’s biggest contract chipmaker. The main chipmaker to Nvidia and Apple Inc. expects revenue of $19.6 billion to $20.4 billion in the June quarter, versus estimates for about $19.1 billion.

Taiwan’s largest company last week disclosed its fastest sales growth since 2022, suggesting demand for the chips that accelerate artificial intelligence development is beginning to offset the fallout from a smartphone market slump. Apple, which accounted for about a quarter of its revenue in 2023, started the year with a deep decline in Chinese iPhone sales.

For a liveblog on TSMC’s earnings, click here.

TSMC has gained about $340 billion of market value since an October 2022 trough, riding bets it will become one of the clearest winners of a global boom in AI development. The company set a 2024 capital expenditure budget of $28 billion to $32 billion at the start of the year. On Thursday, it recorded a better-than-projected 9% rise in net income to NT$225.5 billion ($7 billion) for the March quarter.

It said in January it expects revenue to grow by at least 20% this year as the broader semiconductor market recovers, though uncertainty persists given global macroeconomic volatility. Key supplier ASML Holding NV — the sole provider of the world’s most advanced chipmaking machines — reported a 22% miss on first-quarter bookings Wednesday.

Longer term, investors expect AI-focused chips to gradually take up a larger proportion of revenue. TSMC’s AI revenue is growing at a rate of 50% annually, the company said in January. Still, some investors have warned that the current level of AI chip demand is unsustainable over the long run. Others remain wary given the uncertainty hanging over the Taiwan Strait, the narrow body of water between China and an island it views as part of its territory.

–With assistance from Ville Heiskanen, Gao Yuan and Mayumi Negishi.

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