TSMC Q2 Profit to Jump 30% on AI Chip Demand

Taiwan Semiconductor Manufacturing Co., the leading maker of AI chips, is likely to publish a 30% second-quarter profit increase on Thursday due to rising demand

TSMC, the world’s largest contract chipmaker, has experienced record highs in its stock and the broader Taiwan market (.TWII) due to a surge in AI, which has benefited its customers, including Apple (AAPL.O) and Nvidia. The market value of its American Depositary Receipts exceeded one trillion dollars last week.

According to an LSEG SmartEstimate compiled from 20 analysts, TSMC is anticipated to announce a net profit of T$236.1 billion ($7.25 billion) for the quarter ending June 30. Intelligent estimates give forecasts from more consistently precise analysts with a higher weighting.

This estimate contrasts the net profit of T$181.8 billion for the second quarter of 2023.

TSMC reported a significant increase in second-quarter revenue last week, surpassing market expectations.
Li Fang-kuo, Chairman of President Capital Management Co., anticipates that their products’ third quarter outlook will be exceedingly favorable.

TSMC will provide an update on its outlook for the current quarter and the whole year and its capital expenditure during its quarterly earnings call at 0600 GMT on Thursday.

The company is currently in the process of expanding production. Most manufacturing will continue to be conducted in Taiwan even though TSMC is investing billions in constructing new factories overseas. This includes $65 billion for three facilities in the U.S. state of Arizona.

During its most recent earnings call in April, TSMC maintained its capital spending guidance for this year at $28 billion to $32 billion. This is a decrease from the $30.45 billion it spent last year. The company stated that 70% to 80% of the capital spending would be allocated to advanced technologies.

Chu Yen-min, Chairman of KGI Securities Investment Advisory Co, stated that TSMC could potentially increase its capital expenditures. “Many positive factors will help their stock price and support the broader market.”

The AI surge has contributed to the share increase in Asia’s most valuable company, TSMC. The Taipei-listed stock has risen by 75% this year to historic highs, in contrast to the broader market’s 33% gain.

Intel and Samsung (005930. KS) are attempting to challenge TSMC’s dominance, colloquially called the “sacred mountain protecting the country” due to its critical role in Taiwan’s export-dependent economy.