Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) — the world’s largest contract chip maker — on Thursday reported stronger-than-expected third-quarter earnings as continued demand from the artificial intelligence industry boosted its earnings.
The chipmaker also provided an upbeat outlook for the current quarter, citing in part improved capacity utilization. US-listed shares of the Taiwanese company jumped more than 10% in early trading.
TSMC posted a net profit of T$325.26 billion ($10.1 billion) in the three months to Sept. 30, it said in a press release. The amount was higher than a Reuters estimate of T$300.2 billion.
Third-quarter revenue climbed to $759.69 billion, up 39% from last year. Chief Financial Officer Wendell Huang said fourth-quarter revenue will be between $26.1 billion and $26.9 billion, with a gross margin of 57 percent and 59 percent, while annual revenue is also expected to rise about 30 percent.
Sales were mainly boosted by TSMC’s advanced 3-nanometer chips, which accounted for 20% of total wafer revenue, the company said.
“We continue to see extremely strong AI-related demand from our customers,” said CEO C.C. Wei on a webcast after the results.
Thursday’s earnings come just days after semiconductor equipment maker ASML ( NASDAQ:ASML ) presented a weak sales outlook for 2025, in part due to sluggish chip demand from sectors outside of artificial intelligence.
TSMC’s earnings reflected that trend, with revenue from its digital consumer electronics division, which makes chips for devices such as smart TVs and cameras, falling 19% on a quarterly basis. But this was largely offset by revenue growth from the High-Performance Computing core unit. Both TSMC and ASML are considered standard-bearers for the chip industry.
Tech giants Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) are among TSMC’s biggest customers. Nvidia — maker of some of the most advanced artificial intelligence chips on the market — has become a particular focus of excitement around the nascent technology.
“[Without] [TSMC], there’s no Nvidia and today’s AI movement could grind to a halt,” said Paul Marino, Chief Revenue Officer of Themes ETFs.
“TSMC is an important indicator of how quickly the AI ​​and super data center movement can develop and how healthy the supply dynamics are in the space.”
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Reference;
Kanowsky, S. (2024) TSMC profit surges past expectations, sending US-listed shares higher By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/tsmc-profit-surges-past-expectations-sending-uslisted-shares-higher-premarket-3667625 (Accessed: 17 October 2024).
