Due to strong AI chip demand and high net profits, TSMC raised its annual revenue forecast while declining a U.S. joint venture proposal, choosing independent expansion.
Taiwan Semiconductor Manufacturing Company (TSMC) raised its annual revenue forecast to mid-20% growth on Thursday due to surging demand for AI chips and a higher-than-expected net profit. The company rejected a joint venture factory proposal in the U.S. and continues its expansion independently.
The company’s U.S. shares rose 3.3% pre-market after the announcement, while its Taiwan shares dropped 2.4% due to Trump’s remarks. Trump claimed Taiwan should compensate the U.S. for defence, alleging it dominates America’s semiconductor market. The U.S. now holds 10% of global chip capacity, down from 19% in 2000, while Taiwan has 18%, down from 22%.
TSMC is investing $65 billion in three Arizona plants and, with partner investors, plans or is planning additional facilities in Japan and Germany. Despite Trump’s comments, TSMC’s expansion strategy remained unchanged, focusing on these current projects.
As a key supplier for Apple and Nvidia, TSMC has thrived amid the global AI surge, which has offset the decline in pandemic-driven electronics demand. CEO C.C. Wei highlighted that the booming demand for AI is driving widespread interest in AI features for devices.
TSMC’s capacity is currently “very, very tight,” and they are working hard to meet chip demand through 2026. CFO Wendell Huang noted that supply for advanced 3nm and 5nm nodes will remain constrained next year.
For the current quarter, TSMC forecasts revenue growth of up to 34%, ranging between $22.4 billion and $23.2 billion. The company has revised its capital expenditure plans to $30 billion-$32 billion from the previous $28 billion-$32 billion.
TSMC’s net profit for April-June rose to T$247.8 billion ($7.60 billion), surpassing the T$238.8 billion estimate. Q2 revenue increased by 33% to $20.8 billion, exceeding the earlier forecast. CFO Wendell Huang expects strong demand for smartphones and AI technologies to drive business in Q3 2024.
