(Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s revenue rose 45% in July, accelerating the pace of growth from the June quarter and reinforcing hopes of sustained strong demand for artificial intelligence chips from companies like Nvidia Corp.
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Sales for the month reached NT$256.95 billion (US$7.9 billion). For the third quarter, analysts project that TSMC’s revenue is expected to grow 37% to NT$747.4 billion, with the July result suggesting that TSMC can exceed these expectations.
Taiwan’s largest company is a leading indicator of AI demand, as a chipmaker for major accelerator makers Nvidia and Advanced Micro Devices Inc. The device market is showing signs of recovering from the lows of the post-Covid era. Last month, the world’s largest contract chipmaker raised its full-year growth outlook beyond the 20% high it had previously reached.
TSMC offered an upbeat assessment of its business and prospects when it reported its latest earnings, with CEO CC Wei signaling that the company may have room to raise prices as more customers transition to its more advanced technology and have to compete for limited capacity. High-performance computing, led by AI, contributed 52% of TSMC’s revenue last quarter, the first time it accounted for more than half.
Still, investors have begun to question whether the billions of dollars that big tech companies have invested in the infrastructure to support the AI boom will result in substantial returns, while a potential delay in the development of a new generation of AI chips by Nvidia are raising concerns about the future. emerging technology progress.
What Bloomberg Intelligence says
TSMC’s 44.7% year-over-year sales increase, marking its second largest sales gain in the last 20 months, aligns with our expectations for robust Q3 performance. This increase could indicate strong and sustained demand for AI chips and significant 3-nanometer production orders from Apple, Qualcomm and MediaTek. TSMC is well positioned to surpass the high end of its $23.2 billion sales forecast for Q3.
– Charles Shum, analyst
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Concerns over the global economic outlook last week halted the AI rally that saw major players like TSMC gain billions in market value. Investors chose to cash in on some of the year’s biggest gainers, pushing TSMC shares down 10% in one day, although the company recovered much of that in subsequent days as money managers saw a good opportunity to buy.
–With assistance from Vlad Savov.
(Updates with analyst comment from fifth paragraph)
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