TSMC Q2 2024 Results

Semiconductor manufacturing company in Taiwan On Thursday, revenue and profit beat expectations in the second quarter, as demand for advanced chips used in AI applications continues to rise.

Here are TSMC’s second quarter results compared to LSEG’s consensus estimates:

• Income: 673.51 billion new Taiwan dollars (20.82 billion US dollars), compared to 657.58 billion Taiwan dollars expected
• Net revenue: NT$247.85 billion, compared to NT$238.8 billion LSEG SmartEstimate weighted based on analyst forecasts which are more consistently accurate

TSMC reported a 40.1 percent increase in net revenue from a year earlier to NT$673.51 billion, while its net profit rose 36.3 percent from a year earlier to NT$247.85 billion. The company estimated its second-quarter revenue to be in the range of $19.6 billion to $20.4 billion.

Chairman and CEO CC Wei said on an earnings call Thursday that second-quarter business was supported by strong demand for its leading 3- and 5-nanometer technologies, though it was offset by continued seasonality in smartphones.

The explosive demand for AI has put a strain on chip supplies. TSMC is the world’s leading producer of advanced chips used in everything from smartphones to AI applications, though rivals such as Samsung and Intel have tried to challenge his dominance. This matters Apple And Nvidia among its customers.

“I’m also trying to achieve the balance between supply and demand, but I can’t do it. Now the demand is so high that I had to work very hard to meet customer demand,” Wei told analysts. “I hope I can achieve this balance in 2025 or 2026.”

For the third quarter, business is expected to be supported by strong demand from smartphones and AI, Wei said, adding that they continue to expect 2024 to be “a year of strong growth for TSMC.”

TSMC expects third-quarter revenue of $22.4 billion to $23.2 billion, compared with $17.3 billion in revenue in the same period a year ago.

Rising demand for advanced chips used in AI applications has pushed Taiwan-listed shares of TSMC up nearly 70% since the start of the year.

The chip giant currently produces 3-nanometer chips and plans to begin mass production of 2-nanometer chips in 2025. Typically, smaller nanometer sizes produce more powerful and efficient chips.

Development of the 2-nanometer technology is “progressing well” and is on track for volume production in 2025, TSMC said.

“Demand for generative AI is booming in the cloud and edge. TSMC’s N3 process has good yields and well-managed production lines. The market is well-funded and regional political factors are driving increased demand for advanced processes,” Brady Wang, associate director at Counterpoint Research, said Friday ahead of the earnings release.

Wang said the capacity of the 3-nanometer process is expected to more than double in 2024 from the previous year.

Needham analysts said Monday they expect TSMC to raise its 2024 revenue growth target, reiterating a “buy” rating and raising the price target to $210 from $168 on the chip giant’s U.S.-listed shares.

“We expect TSMC to raise its 2024 revenue growth guidance to “low to mid-20s” from “mid to high 20s,” but maintain its 2024 (capex) guidance at $30 billion in its upcoming earnings call,” Needham said in a note.

According to data from Counterpoint Research, TSMC held 62% of the global foundry market share in the first quarter, up from 59% in the same period a year ago.

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