TSMC reports record highs amid AI boom

Taiwan Semiconductor Manufacturing Co (TSMC), the leading producer of advanced chips for AI applications, is set to report a 30% rise in second-quarter profit on Thursday, driven by soaring demand. The world’s largest contract chipmaker, which counts Apple and Nvidia among its clients, has seen its stock—and the broader Taiwan market—reach record highs. Last week, TSMC’s American Depositary Receipts surpassed a trillion-dollar market value.

For the quarter ending 30 June, TSMC is expected to announce a net profit of T$236.1 billion ($7.25 billion), a significant increase from the T$181.8 billion reported in the same period last year. The company recently reported a substantial rise in second-quarter revenue, exceeding market expectations. Analysts like Li Fang-kuo from President Capital Management Co. anticipate a strong third-quarter outlook for all of TSMC’s products.

TSMC is heavily investing in expanding its production capacity, including spending $65 billion on three new plants in Arizona. However, the majority of its manufacturing will remain in Taiwan. The company is expected to maintain its capital expenditure guidance for this year at $28 billion to $32 billion, with 70% to 80% allocated to advanced technologies. KGI Securities’ Chu Yen-min suggests TSMC raise its capital spending due to favourable market conditions, which could further boost its stock price and support the broader market.

Why does this matter?

TSMC, often called the ‘sacred mountain protecting the country’ for its crucial role in Taiwan’s economy, remains a dominant player in the semiconductor industry despite challenges from Intel and Samsung. The AI boom has significantly increased TSMC’s stock price, which has surged 75% this year, outpacing the 33% gain in the broader market.