- Taiwan Semiconductor Manufacturing Company is expected to report a 30% increase in second-quarter profits to $7.25 billion, driven by heightened demand for its advanced semiconductors used in AI applications, with its ADRs recently surpassing a trillion-dollar valuation.
- TSMC will update its financial projections for the quarter and the year on July 20, including capital expenditure plans, during its upcoming earnings call.
OUR TAKE
TSMC’s robust performance underscores the global demand for AI-driven tech, solidifying its market leadership. Despite looming competition, its strategic investments in cutting-edge capabilities and strong financial results indicate sustained growth potential, crucial for Taiwan’s economy and the semiconductor industry at large.
–Vicky Wu, BTW reporter
What happened
Taiwan Semiconductor Manufacturing Company (TSMC), the premier producer of advanced semiconductors vital for artificial intelligence applications, is forecasted to declare a 30% surge in its second-quarter profits, propelled by mounting demand. The worldwide contract chip leader, which serves technology behemoths such as Apple and Nvidia, has witnessed its share price and Taiwan’s market escalate to unparalleled heights, buoyed by the AI-induced upsurge. Recently, its American Depositary Receipts crossed a valuation threshold of one trillion dollars.
Analysts anticipate that TSMC’s net profit for the quarter concluding on June 30 will amount to $7.25 billion, marking an increase from $5.58 billion recorded in the corresponding period last year. This prediction is grounded in a London Stock Exchange Group (LSEG) SmartEstimate, which accords greater weightage to analysts renowned for their consistent accuracy.
During its impending earnings call scheduled for 06:00 GMT on July 20, TSMC will recalibrate its financial forecasts for the current quarter and the entirety of the year, encompassing capital expenditure strategies as it ramps up production capabilities.
Also read: TSMC’s Q2 results may drive $420B rally with AI demand
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Why it’s important
Affectionately dubbed the “sacred mountain protecting the country”, TSMC’s crucial role in Taiwan’s export-led economy is widely acknowledged. However, its unparalleled standing in the global semiconductor marketplace is not without adversaries. Rivals such as Intel and Samsung are diligently endeavouring to secure a greater slice of this profitable sector, with ambitions to challenge TSMC’s supremacy.
Nonetheless, TSMC’s share prices have ascended to unparalleled heights, especially this year. Listed on the Taipei exchange, its stock has skyrocketed by 75%, achieving all-time summits and markedly outpacing the broader market’s 33% rise. This extraordinary climb can be largely attributed to the burgeoning demand for artificial intelligence applications, which has fortified the company’s status as Asia’s most valuable entity.
TSMC’s strategic foresight and innovative capability have played a pivotal role in its triumph. At its latest earnings conference in April, the company remained resolute in its capital expenditure forecast for the year, projecting a range of $28 billion to $32 billion. This follows a $30.45 billion expenditure in the previous year, with a significant proportion—between 70% to 80%—committed to investments in avant-garde technologies.
