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Taiwan Semiconductor Manufacturing Company, the world's largest chipmaker, further upgraded its growth outlook on a boom in artificial intelligence and a broad recovery in other sectors, defying market unrest over the longevity of the industry's current recovery.
“We proceed to see extremely strong AI-related demand,” CC Wei, chairman and CEO, told investors on Thursday, adding that TSMC expects revenue growth of nearly 30 percent this 12 months.
The optimistic forecast got here because the Taiwan-based company reported a 54 percent year-on-year rise in third-quarter net profit to NT$325.3 billion (US$10.1 billion), beating its forecast from three months ago exceeded.
A tech sell-off followed after ASML, the Dutch company that supplies the lithography machines used to make the world's most advanced chips, reported orders half of analysts' expectations.
TSMC, which dominates the production of cutting-edge semiconductors, appears to be insulated from this weakness.
Wei identified that his customers include just about all corporations developing AI chips, including so-called hyperscalers like Amazon and Microsoft, and said: “We're probably getting the deepest, most comprehensive insight.” The demand is real and I imagine that that is just the start and can proceed for a few years to come back.”
The company expects the contribution of AI-related chips to sales to triple to fifteen percent this 12 months in comparison with 2023.
However, TSMC said its strong performance within the third quarter – revenue, gross margins and operating margins all beat previous forecasts – was also supported by a recovery in demand across segments, from smartphones to industrial applications to auto chips.
The company stays somewhat cautious about investment plans for brand new capacities. According to TSMC, capital spending in 2025 will “very likely” be higher than this 12 months, probably just over $30 billion.
But through the top of September, the corporate had spent just $18.5 billion, well below its full-year forecast of as much as $30 billion. A significant slice of expanded capability spending – which usually accounts for greater than 70 percent of TSMC's capital expenditures – goes toward ASML machines.
Analysts said ASML's weak orders within the third quarter were more attributable to Intel and Samsung, each of which were struggling to maintain up with chip manufacturing for out of doors customers.
TSMC produces chips for greater than 500 corporations, including Nvidia's latest AI processors and Apple's iPhone chips, a business model that offers the corporate unrivaled scale and balance.
“While ASML provided a negative update, TSMC continues to advance,” said Ben Barringer, technology analyst at Quilter Cheviot. “This is encouraging and has resulted in TSMC raising its guidance, giving renewed confidence to the sector following the news from ASML.”
He emphasized that TSMC, with its stable business outside of AI, is significantly higher positioned than Intel and Samsung. “If the sector is hit by an actual downturn, it ought to be in a powerful position to weather this and emerge well from the crisis,” he said.
