TSMC’s August revenue rises 33% as demand for AI chips holds

(Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s revenue rose 33% last month in a positive sign for investors betting on a recovery in the smartphone market and sustained demand for Nvidia Corp’s AI chips.

Bloomberg’s most read

Sales reached NT$250.9 billion ($7.8 billion) in August, slowing from a 45 percent growth rate the previous month. For the third quarter, analysts expect TSMC’s revenue to rise 37%, extending a recovery from the post-Covid depths of 2023.

While only a one-month snapshot, the results could ease concerns about whether the market has overestimated the sustainability of AI infrastructure spending. Shares of Nvidia lost about $279 billion on Sept. 3 in its biggest one-day loss after it reported earnings that fell short of the highest expectations.

That puts TSMC on track to beat average forecasts for third-quarter revenue by a small margin, Bernstein analysts led by Mark Li wrote. “If September follows the average seasonality of the past 8 years, 3Q24 revenue would exceed both the midpoint of guidance and consensus by 5 to 6%,” he said.

Taiwan’s largest company now makes more than half of its revenue from high-performance computing, the segment of its business driven by AI demand.

Chipmaker Nvidia is also the main manufacturer for the iPhone’s main processor. Apple Inc. unveiled the iPhone 16 on Monday, built for AI “from the ground up,” but with capabilities that will be gradually added to the device through software updates. Wall Street is betting on a rebound in demand for mobile devices.

What Bloomberg Intelligence says

Apple’s adoption of Wi-Fi 7 on the iPhone 16 and 16 Pro should accelerate the penetration of the technology and increase demand for TSMC’s N6 (7 nanometer) and N4 (5 nanometer) nodes already used by Broadcom and MediaTek and others for Wi- Be 7 chip production. The performance gains of the A18 and A18 Pro processors align with our expectations, reinforcing a positive outlook for sales growth in TSMC’s N3E node.

– Charles Shum, analyst

Click here for research.

TSMC gave an upbeat assessment of its business and outlook when it last reported earnings. In July, the world’s largest contract chipmaker raised its full-year growth outlook, surpassing the mid-point of 20% it had previously guided for.

The story continues

As the market improves, CEO CC Wei is leading a major global expansion.

The company has reported early progress ramping up a project in Arizona, is eyeing a third plant in Japan and broke ground a few weeks ago on a €10 billion German facility.

(Updates with analyst comment in fourth paragraph)

Bloomberg Businessweek’s most read

©2024 Bloomberg LP