(Bloomberg) — Taiwan Semiconductor Manufacturing Co. raised its goal for 2024 revenue growth after quarterly results beat estimates, allaying concerns about global chip demand and the sustainability of an AI hardware boom.
Most Read from Bloomberg
The important chipmaker to Nvidia Corp. and Apple Inc. now expects sales to climb 30% this yr, up sharply from previous projections for a maximum mid-20% rise. That’s after TSMC reported better-than-predicted earnings for the September quarter. It foresees capital expenditure of a bit greater than $30 billion in 2024 — according to previous expectations.
TSMC’s raised outlook should help tamp down fears that investors mis-judged the AI demand. Its shares have surged greater than 70% this yr, outpacing lots of Asia’s biggest tech firms in a mirrored image of strong sales of the Nvidia Corp. chips vital to artificial intelligence development.
Taiwan’s largest company had raised its outlook for 2024 revenue just just a few months ago in July, underscoring expectations for spending on AI infrastructure from the likes of Microsoft Corp. and Amazon.com Inc. Regular adoption of artificial intelligence must also help fuel sales of iPhones and other gadgets in the long term.
For a liveblog on TSMC’s earnings, click here.
Investors had watched for deviations in outlook after major supplier ASML Holding NV reported only half the orders analysts estimated. The chipmaking gear maker blamed slower-than-expected recovery within the automotive, mobile and PC markets, impacting expansion plans for chip plants. But AI stays a shiny spot, its executives said.
On Thursday, TSMC reported a better-than-projected 54% rise in September-quarter earnings.
While official trading of the corporate’s American depositary receipts won’t begin for just a few hours, the ADRs were up about 4.5% on Robinhood’s overnight trading platform. TSMC is popular amongst US retail investors looking for to bet on the AI theme. Shares of Japanese chip gear makers including Lasertec Corp. also pared losses in Tokyo after TSMC reported.
What Bloomberg Intelligence Says
TSMC’s short- to medium-term revenue outlook stays solid despite the potential slowdown in global fabrication-capacity growth implied by ASML — its largest tool supplier — reporting a 3Q book at half the expected level. Strong demand for TSMC’s 2- and 3-nanometer technologies from Nvidia, AMD, Apple and Qualcomm provide an offset. TSMC’s superior production yields, improving EUV machine productivity and leadership in 2.5D and 3D packaging offer further sales support.
– Charles Shum, analyst
Click here for the research.
The world’s largest maker of advanced chips has been one among the largest beneficiaries of a world race to develop artificial intelligence. Its shares have greater than doubled since that boom took off in late 2022 with the debut of OpenAI’s ChatGPT. TSMC’s market capitalization briefly crossed the $1 trillion mark within the US.
Yet even before ASML, some investors have grown cautious in regards to the sustainability of worldwide AI spending. They query whether big tech firms like Meta Platforms Inc. and Alphabet Inc. will proceed to splash out on AI chips and data centers with out a truly killer AI application.
The risks of information center over-capacity and geopolitical issues have unnerved some investors. Bloomberg reported this week that Biden administration officials have discussed capping sales of advanced AI chips from Nvidia and other American corporations on a country-specific basis.
For now, TSMC appears to be pursuing a rapid international expansion.
It’s planning more plants in Europe with a spotlight in the marketplace for artificial intelligence chips, in accordance with a senior Taiwanese official. That’s on top of construction underway in Japan, Arizona and Germany.
–With assistance from Vlad Savov, Cindy Wang and Mayumi Negishi.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.