TSMC Q2 Profits Surge 30% Amid AI Chip Demand Boom

TSMC Earning: Taiwan Semiconductor Manufacturing Company (TSMC), the leading producer of advanced chips for artificial intelligence applications, is anticipated to announce a 30 per cent increase in second-quarter profits on Thursday, driven by soaring demand for AI technologies.

The world's largest contract chipmaker, with major clients including Apple and Nvidia, has seen its stock price and the broader Taiwan market (.TWII) reach record highs. Recently, TSMC’s American Depositary Receipts surpassed a trillion-dollar market value.

According to an LSEG SmartEstimate, drawn from 20 analysts, TSMC is expected to report a net profit of T$236.1 billion ($7.25 billion) for the quarter ending June 30. These SmartEstimates prioritize forecasts from consistently accurate analysts. This projection significantly surpasses the T$181.8 billion net profit recorded in the second quarter of 2023.

Last week, TSMC reported a substantial increase in second-quarter revenue, exceeding market expectations. Li Fang-kuo, President Capital Management Co Chairman, expressed optimism about the third-quarter outlook for all TSMC products.

During its quarterly earnings call at 0600 GMT on Thursday, TSMC will update its outlook for the current quarter and the full year, including its capital expenditure plans as it rapidly expands production capacity.

TSMC is investing billions in new factories worldwide, including $65 billion for three plants in Arizona, USA, although most manufacturing will remain in Taiwan. In its last earnings call in April, TSMC maintained its capital spending guidance for this year at $28 billion to $32 billion, similar to last year’s $30.45 billion, with 70 per cent to 80 per cent allocated to advanced technologies.

Chu Yen-min, Chairman of KGI Securities Investment Advisory Co, suggested that TSMC might increase its capital spending, citing numerous positive factors supporting its stock price and the broader market.

The AI boom has significantly boosted the stock price of Asia's most valuable company, with TSMC’s Taipei-listed shares soaring 75 per cent this year to historic highs, compared to a 33 per cent rise in the broader market. TSMC, often referred to as the "sacred mountain protecting the country" due to its vital role in Taiwan's export-driven economy, faces minimal competition despite efforts from Intel and Samsung to challenge its dominance.

With Reuters Inputs