Chipmaking Giant TSMC Sees Profits Skyrocket 54%
The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), has just reported a staggering 54% surge in profits for the third quarter, driven primarily by the insatiable demand for its cutting-edge artificial intelligence (AI) capable chips.
Strong Smartphone and AI Demand Fuels Growth
The Taiwan-based company’s revenue for the quarter reached an impressive $23.5 billion, a significant 36% increase from the same period last year, exceeding Wall Street’s expectations. Net income came in at a remarkable $10.1 billion, also surpassing estimates compiled by FactSet. According to Wendell Huang, TSMC’s chief financial officer, “Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies.”
Looking Ahead: Continued Growth Expected
As the company moves into the fourth quarter of 2024, Huang anticipates that strong demand for its leading-edge process technologies will continue to drive business growth. In fact, TSMC’s U.S.-listed shares jumped 9% in Thursday morning trading following the earnings report. The company’s chief, C.C. Wei, has previously stated that he expects chip production to catch up to demand by 2025 or 2026.
Analysts Bullish on TSMC’s Future
Wedbush analysts, led by Matt Bryson, are optimistic about TSMC’s prospects, stating in a note titled “No End in Sight to AI Derived Strength” that the company’s third-quarter results give them more confidence in their views that TSMC will continue to grow its gross margins. The analysts expect AI chip revenues to more than triple in 2024, accounting for around a mid-teens percentage of TSMC’s revenues.
Fourth Quarter Projections
For the fourth quarter, TSMC estimates that its revenue will come in between $26.1 billion and $26.9 billion, a significant increase from last quarter. The company is projecting a gross profit margin of 57.0% to 59.0%, consistent with the third quarter or slightly higher.
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