TSMC sales surge 45% in July on strong demand for AI chips

(Times Of Update) — Taiwan Semiconductor Manufacturing Co.’s revenue rose 45% in July, accelerating its pace of growth from the June quarter and boosting hopes of continued strong demand for artificial intelligence chips from companies such as Nvidia Corp.

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Monthly sales reached NT$256.95 billion (US$7.9 billion). For the third quarter, analysts expect TSMC’s revenue to rise 37% to NT$747.4 billion, with July’s results suggesting TSMC could exceed those expectations.

Taiwan’s largest company is a leading indicator of AI demand, serving as a reference chipmaker for major accelerator makers Nvidia and Advanced Micro Devices Inc. It is also the sole supplier of processors for Apple Inc.’s iPhones, at a time when the mobile device market is showing signs of rebounding from post-Covid lows. Last month, the world’s largest contract chipmaker raised its full-year growth forecast beyond the 20% maximum it had previously envisioned.

TSMC gave an upbeat assessment of its business and outlook in its latest earnings release, with CEO CC Wei signaling that the company may have room to raise prices as more of its customers upgrade to its most advanced technology and compete for limited capacity. High-performance computing, driven by AI, contributed 52% of TSMC’s revenue in the latest quarter, the first time it accounted for more than half.

However, investors have begun to question whether the billions of dollars that big tech companies have poured into infrastructure to support the rise of AI will translate into substantial returns, while a potential delay in Nvidia’s development of a new generation of AI chips raises concerns about the progress of the emerging technology.

Concerns over the global economic outlook over the past week have interrupted the AI ​​rally that had seen key players like TSMC add billions of dollars in market value. Investors chose to sell some of the year’s biggest gainers, sending TSMC shares down 10% in one day, though the company has recovered much of that sum in the following days as fund managers saw a good buying opportunity.

–With the help of Vlad Savov.

(Updated with additional details from TSMC’s latest earnings report)

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