(Bloomberg) — Taiwan Semiconductor Manufacturing Co. raised its 2024 revenue growth target after quarterly results beat estimates, allaying concerns about global chip demand and the sustainability of an AI hardware boom .
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The top chipmaker of Nvidia Corp. and Apple Inc. now expects sales to rise 30% this year, well above previous projections of a maximum increase of about 20%. This was after TSMC reported better-than-expected earnings for the September quarter. It forecasts capital spending of just over $30 billion in 2024, in line with previous expectations.
TSMC’s improving outlook should help calm fears that investors have misjudged AI demand. Its shares have risen more than 70% this year, outperforming many of Asia’s largest technology companies, reflecting strong sales of Nvidia Corp. chips vital to the development of artificial intelligence.
Taiwan’s largest company had raised its 2024 revenue outlook just a few months ago in July, underscoring expectations for spending on AI infrastructure by companies such as Microsoft Corp. and Amazon.com Inc. The continued adoption of the Artificial intelligence should also help boost sales of iPhones. and other long-term devices.
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Investors had been watching for deviations in the outlook after major supplier ASML Holding NV reported only half the orders estimated by analysts. The chip-making equipment maker blamed a slower-than-expected recovery in the automotive, mobile and PC markets, which hit chip plant expansion plans. But AI remains a bright spot, its executives said.
On Thursday, TSMC reported a better-than-projected 54% rise in September quarter earnings.
While official trading of the company’s American Depository Receipts won’t begin for a few hours, ADRs are up about 4.5% on Robinhood’s overnight trading platform. TSMC is popular among US retail investors looking to bet on the AI theme. Shares of Japanese chip equipment makers, including Lasertec Corp., also pared losses in Tokyo after the TSMC report.
What Bloomberg Intelligence Says
TSMC’s near- and medium-term revenue outlook remains strong despite the potential slowdown in global manufacturing capacity growth implied by ASML, its largest tooling supplier, which reported a third-quarter book in the middle of the year. expected level. Strong demand for TSMC’s 2- and 3-nanometer technologies from Nvidia, AMD, Apple and Qualcomm provides compensation. TSMC’s superior production yields, improved EUV machine productivity and leadership in 2.5D and 3D packaging offer further sales support.
-Charles Shum, analyst
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The world’s largest maker of advanced chips has been one of the biggest beneficiaries of a global race to develop artificial intelligence. Its shares have more than doubled since that boom took off in late 2022 with the debut of OpenAI’s ChatGPT. TSMC’s market capitalization briefly surpassed the $1 trillion mark in the United States.
However, even before ASML, some investors had become cautious about the sustainability of global AI spending. They wonder whether big tech companies like Meta Platforms Inc. and Alphabet Inc. will continue investing in AI chips and data centers without a truly lethal AI application.
Risks from data center overcapacity and geopolitical issues have made some investors nervous. Bloomberg reported this week that Biden administration officials have discussed limiting sales of advanced AI chips from Nvidia and other American companies in specific countries.
For now, TSMC appears to be pursuing rapid international expansion.
It is planning more plants in Europe focusing on the artificial intelligence chip market, according to a senior Taiwanese official. This is in addition to ongoing construction in Japan, Arizona and Germany.
–With help from Vlad Savov, Cindy Wang and Mayumi Negishi.
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