They were an impressive set of results with TSMC reporting a profit of $10 billion for the quarter ended September 30, which is the highest for any quarter.
Over the course of 2024 TSMC said that it expected revenues to grow by around 30%, significantly up on previous estimates.
In response to the demand for AI chips TSMC said that its capital spending in the current quarter would more than double to around $11.5 billion and that the budget was likely to increase further next year.
"The demand is real," Chairman and CEO C.C. Wei told analysts and he said that he expected that to continue for several years.
TSMC’s strong performance comes after doubts were raised about the strength of the AI market after the Dutch chipmaking equipment company ASML reported a weaker sales outlook for its equipment going into 2025. ASML had certainly ‘startled’ the market with its downbeat forecast which in turn raised concerns as to the health of the broader AI market, according to analysts. But it seems TSMC’s forecasts have done much to assuage those worries.
TSMC’s positive outlook saw shares in leading AI chipmakers such as Nvidia and AMD jump, while its own shares responded positively, and the company is on course to see its valuation top $1 trillion.
With solid demand expected to last for at least the next five years, capital expenditure for 2025 is likely to be higher than this year, TSMC said.
TSMC is currently spending billions of dollars building new factories overseas, including $65 billion on three plants in the US state of Arizona and, according to the company, its first fab in Arizona will see volume production in 2025, while its second fab there should start volume production in 2028.
The Taiwan chipmaker said it expected fourth-quarter revenue of $26-27 billion, up from $19.6 billion in the same period of 2023.
According to TSMC its impressive performance was supported by strong smartphone and AI-related demand for its 3nm and 5nm technologies and it said that demand for its leading-edge process technologies was expected to continue driving growth in the future.
However, it’s not been all good news for the company.
It appears that it could be facing some political uncertainty after a US media outlet said the US Commerce Department was investigating if it had been making chips for China's Huawei, whose access to non-Chinese chips has been curbed by US export controls.
Whether that investigation takes place, or not, the future of the company looks solid as it faces little competition despite the best efforts of Intel and Samsung.
