Taiwan Semiconductor Manufacturing Company (TSM) (TSMC), the world’s largest chipmaker, saw its profits soar 54% within the third quarter, driven by continued demand for its artificial intelligence-capable chips.
The Taiwan-based company reported Thursday $23.5 billion in revenue for the quarter, up 36% from a 12 months ago and topping Wall Street’s expectations. Net income got here in at $10.1 billion, also blowing past estimates compiled by FactSet (FDS).
“Our business within the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” said Wendell Huang, chief financial officer of TSMC. “Moving into fourth quarter 2024, we expect our business to proceed to be supported by strong demand for our leading-edge process technologies.”
TSMC’s U.S.-listed shares jumped 9% in Thursday morning trading following the earnings report.
Huang had previously said that the corporate expected smartphone- and AI-related demand to drive business within the third quarter. Looking ahead, TSMC chief C.C. Wei has said he expects chip production to catch as much as demand by 2025 or 2026.
Wedbush analysts say the corporate could keep riding this high for an extended while. In a note Thursday titled “No End in Sight to AI Derived Strength,” analysts, led by Matt Bryson, said the third-quarter results give more confidence to views that TSMC will have the opportunity to proceed growing gross margins. TSMC’s gross margins were 58% for the quarter.
The analysts expect AI chip revenues to greater than triple in 2024 and account for around a mid-teens percentage of TSMC’s revenues.
For the fourth quarter, TSMC estimates that its revenue will are available between $26.1 billion and $26.9 billion — a multi-billion dollar increase from last quarter. It’s projecting gross profit margin of 57.0% to 59.0%, consistent with the third quarter or barely higher.