Trends
TSMC soars 30%: AI chip craze fuels a profit leap in Q2
Analysts expect TSMC’s profit to rise 30% year-on-year to $7.25 billion in the second quarter due to surging demand for AI chips. TSMC has customers include Apple and NVIDIA and is spending billions of dollars to build new factories overseas.
Headline
Analysts expect TSMC’s profit to rise 30% year-on-year to $7.25 billion in the second quarter due to surging demand for AI chips. TSMC has customers include Apple and NVIDIA and is spending billions of dollars to build new factories overseas.
Context
OUR TAKE Strong demand for AI chips driven by the AI boom has pushed TSMC’s shares, Asia’s top company by market capitalisation, higher. With its advanced manufacturing technology and superior product quality, TSMC has successfully captured this market opportunity and demonstrated continued growth potential, playing a key role in Taiwan province’s export-dependent economy. “Currently, there is a shortage of everything in the AI supply chain. Taiwan semiconductor stocks are not overvalued. Shares have risen a lot, but they are backed by earnings,” said Robert Cheng, an analyst at Bank of America in Taipei. Not coincidentally, Jian Shi Cortesi, portfolio manager at Gam Investment Management, agrees, “AI demand can continue for at least the next few quarters, as there is no sign of a slowdown in demand for AI chips.” –Elodie Qian, BTW reporter Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, is expected to post a net profit of NT$236.1 billion (US$7.25 billion) for the quarter ended 30 June according to forecasts from LSEG SmartEstimate (from 20 analysts). TSMC’s net profit for the second quarter of 2023 is NT$181.8 billion.
Evidence
Pending intelligence enrichment.
Analysis
TSMC customers include Apple and NVIDIA, and the AI boom has pushed TSMC’s shares, as well as the entire China-Taiwan stock market, to record highs. TSMC’s U.S. stock market value topped $1 trillion last week. “I expect the third quarter outlook for all of their products to be very good,” said President Capital Management Co Chairman Li Fang-kuo. TSMC will also update its current quarterly and full-year earnings outlook, including capital expenditures as it ramps up production expansion. TSMC is spending billions of dollars to build new factories overseas, including a $65 billion investment in three plants in the US state of Arizona, although the company says most of its manufacturing operations will stay in Taiwan. “TSMC could raise their capital spending,” said KGI Securities Investment Advisory Co Chairman Chu Yen-min. “There are many positive factors which will help their stock price and support the broader market.” Also read: TSMC Q2 profit soars 30% on AI demand
Key Points
- Analysts expect TSMC’s profit to rise 30% year-on-year to $7.25 billion in the second quarter due to surging demand for AI chips.
- TSMC’s customers include Apple and NVIDIA and it is spending billions of dollars to build new factories overseas.
Actions
Pending intelligence enrichment.
