Taiwan Semiconductor Manufacturing Company (TSMC) has seen a significant rise in its stock value, jumping 7% in pre-market trading following the release of its quarterly earnings report. The company reported a 54% increase in net profit in the third quarter, reaching 325.3 billion Taiwanese dollars ($10.1 billion). This surge in profit was driven by growing demand for advanced chips used in AI applications.
TSMC, the world’s largest producer of advanced chips, serves major clients such as Apple and Nvidia. The company’s net revenue for the third quarter reached $23.5 billion, marking a 36% year-on-year increase. Additionally, TSMC’s gross margin rose to 57.8% in the third quarter, up from 54.3% in the same period last year.
During an earnings call, TSMC’s Chief Financial Officer Wendell Huang shared the company’s optimistic outlook for the fourth quarter, forecasting revenue between $26.1 billion and $26.9 billion. This represents a significant sequential increase and a 35% year-over-year growth at the midpoint. TSMC attributes its strong performance in the third quarter to robust demand for its 3nm and 5nm technologies, particularly in the smartphone and AI sectors.
CEO C.C. Wei highlighted the increasing demand for AI-related chips, emphasizing TSMC’s position as a key player in meeting this demand. The company has been in close collaboration with customers, including AI innovators and hyperscalers, to deliver cutting-edge semiconductor solutions.
TSMC’s shares in Taipei have surged nearly 80% year-to-date, outperforming the broader market. The company plans to increase its capital expenditure for the year to slightly above $30 billion, reflecting its commitment to expanding manufacturing capacity. TSMC has been making significant investments globally, including the construction of chip plants in Arizona and the opening of a new factory in Japan.
While TSMC’s earnings report indicates strong performance in the chip industry, some market participants have raised concerns about the long-term sustainability of the AI boom. Despite this, industry leaders like Young Liu of Foxconn believe that the AI trend still has room for growth, especially as technologies continue to evolve.
Overall, TSMC’s impressive financial results underscore the growing demand for advanced chips used in AI applications and other high-tech sectors. The company’s strategic investments in manufacturing capabilities position it well to capitalize on future opportunities in the semiconductor industry.