AI Demand Boosts TSMC Outlook, Exceeding Estimates

Taiwan Semiconductor Manufacturing Co. is expecting a significant increase in revenue this quarter, projecting a rise of up to 30%. This surge is fueled by a surge in demand for advanced chips used in AI development, particularly from companies like Nvidia Corp. This positive outlook comes after the company reported its first profit increase in a year, thanks to strong demand in the AI sector.

The firm, a key supplier to tech giants like Nvidia and Apple Inc., anticipates revenue of $19.6 billion to $20.4 billion in the June quarter, surpassing earlier estimates. This growth is a result of a growing demand for chips that power AI development, which is helping to offset the decline in the smartphone market.

TSMC has witnessed impressive sales growth, hinting at the increasing importance of chips driving AI advancement. The company has seen its market value grow significantly since 2022, as investors bet on its success in the AI boom. Setting a capital expenditure budget of $28 billion to $32 billion, the company is poised to capitalize on this growth.

Despite the positive outlook, TSMC remains cautious due to global macroeconomic volatility. The company is expected to see growth of at least 20% this year as the broader semiconductor market bounces back. However, challenges remain, including potential geopolitical tensions in the Taiwan Strait.

Investors are eyeing the long-term potential of AI-focused chips, with TSMC reporting annual growth of 50% in its AI revenue. While some caution that current levels of AI chip demand may not be sustainable, others remain optimistic about the company’s future prospects in the AI market.