Investing.com — Taiwan Semiconductor Manufacturing Co. (TSMC, TW:) reported better-than-expected second-quarter profit as demand for chips from the artificial intelligence industry continued to be strong.
The world’s largest contract chipmaker forecast a slight increase in capital spending this year, as it needs to continue expanding production capacity and technology development in the face of huge demand from AI.
But the increased demand is expected to boost revenue more than initially expected, leading chipmakers to firm up their outlook for the current quarter and even slightly raise their 2024 revenue forecasts.
TSMC said its net profit was NT$247.85 billion (US$7.6 billion), compared with a Reuters forecast of NT$236.1 billion.
The company, whose customers include technology giants Nvidia Corp. (NASDAQ:) and Apple Inc. (NASDAQ:)L, reported better-than-expected second-quarter sales in early July, rising 40% to NT$673.51 billion (US$20.65 billion).
Chief Financial Officer Wendell Huang said on a conference call after the earnings release that he now expects third-quarter revenue to be between $22.4 billion and $23.2 billion. Huang said he now expects TSMC’s full-year capital expenditures to be between $30 billion and $32 billion, up slightly from the lower end of his previous forecast of $28 billion.
During a conference call after the earnings release, CEO CC Wei said the company now expects full-year sales growth to be in the mid-teens, slightly up from its previous forecast of growth in the low teens.
TSMC has benefited greatly from the surge in demand for AI over the past year, as many tech giants raced to roll out their own products following the success of OpenAI’s ChatGPT.
This has resulted in the majority of TSMC’s revenues coming from “advanced technologies,” which consist of wafer sizes of 7 nanometers and above.
Strong demand from AI has seen TSMC’s valuation rise dramatically over the past year, pushing the market capitalization of its American Depositary Shares (NYSE:) to over $1 trillion.
The company also boasts some of the most advanced chip manufacturing capabilities in the industry and is considered a pioneer in the global chip manufacturing industry. The company is currently investing billions of dollars to build a new facility in Arizona, US.
