Taiwan’s Chip Giant Set to Soar: A Boom in Artificial Intelligence
The world of artificial intelligence is abuzz, and Taiwan Semiconductor Manufacturing Co (TSMC) is reaping the rewards. As the dominant producer of advanced chips used in AI applications, TSMC is expected to report a staggering 42% leap in third-quarter profit on Thursday. This surge in demand is driven by the widespread adoption of AI across various industries, from tech giants like Apple and Nvidia to a plethora of other sectors.
A Surge in Demand
TSMC’s customers are clamoring for its cutting-edge chips, leading to a predicted net profit of T$300.1 billion ($9.33 billion) for the quarter ended September 30. This estimate, drawn from 23 analysts, surpasses the 2023 third-quarter net profit of T$211 billion. The company’s Taiwan-dollar denominated third-quarter revenue has already jumped, exceeding market expectations.
Global Expansion
TSMC is racing to expand production, investing billions of dollars in building new factories overseas. The company has committed $65 billion to three plants in Arizona, USA, although most manufacturing will remain in Taiwan. On its last earnings call in July, TSMC raised its full-year revenue forecast and adjusted its capital expenditure plans for this year.
Capitalizing on the AI Boom
The second half of the year is traditionally the peak season for Taiwanese tech companies, as they rush to supply customers ahead of the year-end holiday season in major Western markets. The AI boom has propelled TSMC’s Taipei-listed stock to a remarkable 76% gain so far this year, outpacing the broader market’s 28% gain.
The “Sacred Mountain” of Taiwan’s Economy
TSMC, affectionately referred to as the “sacred mountain protecting the country” in Taiwan, plays a critical role in the country’s export-dependent economy. With little competition, TSMC is poised to maintain its dominance, although Intel and Samsung are attempting to challenge its position.
What’s Next?
On Thursday, TSMC will update its outlook for the current quarter and the full year, including its capital expenditure plans. As the company continues to ride the AI wave, investors will be watching closely to see how it navigates the sustained weakness in parts of the chip market.
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