Taiwan's TSMC, the world's largest contract chipmaker, revised its annual revenue forecast upwards on Thursday due to robust demand for chips used in artificial intelligence. The company dismissed the notion of a joint venture factory in the United States, emphasizing its strong position as a key supplier to major firms like Apple Inc and Nvidia. TSMC has capitalized on the global AI surge, which has supported its business amid declining demand for electronics following the pandemic peak.
Earlier, the leading indicator for the chip industry surpassed market expectations with its net profit. It revised its 2024 revenue outlook to show growth ranging from slightly above the mid-20 percent mark in US dollars, an upgrade from its earlier forecast of growth in the low to mid-20 percent range. "AI is so hot; right now everybody, all my customers, want to put AI functionality into their devices", Chairman and CEO CC Wei told analysts and reporters at an earnings conference.
The company's shares listed in the US climbed 3.3 percent in pre-market trading after the earnings report. Conversely, its shares listed in Taiwan ended the day down 2.4 percent prior to the earnings release. This decline extended losses from earlier in the week, which followed remarks by US Republican presidential candidate Donald Trump suggesting that Taiwan should compensate the US for what he claimed was the entirety of America's chip business.
TSMC is investing $65 billion in three new plants in Arizona, USA, with additional factories in operation or planned in Japan and Germany, where it has partnered with investors. When questioned about the possibility of a joint venture in the United States in response to comments made by former President Trump, TSMC did not confirm or deny the prospect. "So far we did not change any of our original plans of expansion of our overseas fabs. We continue to expand in Arizona, in Kumamoto, and maybe in future in Europe. No change in our strategy. We continue in our current practice", he added.
TSMC expects its revenue for the current quarter to rise by up to 34%, ranging from $22.4 billion to $23.2 billion. The company has revised its capital expenditure projections for the year to between $30 billion and $32 billion, adjusting from a previous forecast of $28 billion to $32 billion. TSMC reported a net profit of NT$247.8 billion (approximately $7.60 billion USD) for April-June, up from NT$181.8 billion in the same period last year.
TSMC's profit for the quarter ended June 30 surpassed expectations, beating the NT$238.8 billion estimate derived from an LSEG SmartEstimate based on forecasts from 21 analysts known for their consistent accuracy. In the second quarter, revenue at TSMC, the most valuable publicly listed company in Asia, increased by 33% to reach $20.8 billion, exceeding the company's earlier projection of $19.6 billion to $20.4 billion.