Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that revenue this quarter would expand about 11 percent sequentially, supported by strong demand for artificial intelligence (AI) and 3-nanometer chips.
TSMC has seen nascent signs of stabilizing demand for computers and smartphones in the past few months, which has helped drive down customer inventories to healthy levels this quarter and heralds “healthier growth” for next year, it said.
“We are receiving some urgent purchase orders asking for more chips to meet demand,” TSMC chief executive officer C.C. Wei (魏哲家) told investors. “That gave us a hint that inventory control has already become healthier than we thought.”
Photo: An Rong Xu, Bloomberg
The semiconductor downcycle is “very close” to hitting the bottom, Wei said.
However, it remains unclear whether the recovery would be a “sharp rebound,” given macroeconomic uncertainty and customers’ caution on inventory management, he said.
Customers are showing “stronger and stronger” demand for AI chips, as more companies are infusing edge devices, mainly computers and smartphones, with AI functions, he said.
The US’ new curbs on AI chip exports to China would have “limited” effect, at least in the short term, Wei said.
The near-term impact should be “manageable” and TSMC is evaluating the long-term consequences, he said.
To meet demand for AI chips, TSMC is boosting chip-on-wafer-on-substrate (CoWoS) packaging capacity through 2025, Wei said.
Its goal is to double its CoWoS capacity by the end of next year, he said.
TSMC yesterday kept its capital spending for this year unchanged at about US$32 billion.
Revenue this quarter is to increase by between 8.8 and 13.43 percent to between US$18.8 billion and US$19.6 billion, the company said.
Full-year revenue would be US$68.47 billion to US$69.27 billion, down 8.71 to 9.76 percent from last year, but better than a 10 percent decline TSMC estimated earlier this year, thanks to the ramp-up of 3-nanometer technology, it said.
Gross margin this quarter is expected to drop to between 51.5 and 53.5 percent, from 54.3 percent last quarter, due to dilution from higher production of 3-nanometer chips, TSMC said.
Net profit expanded 16 percent quarter-on-quarter, but dropped 25 percent annually to NT$211 billion (US$6.53 billion) last quarter, or earnings per share of NT$8.14, it said.
TSMC said it is confident it would fend off competition from Intel Corp, which aims to reclaim its technology leadership in 2025 with an 18A chip.
TSMC said its 2-nanometer technology would be the most advanced when it is introduced in 2025.
The company is not concerned about market share loss, Wei said, adding that its enhanced 3-nanometer technology, dubbed N3P, would have comparable performance to the 18A chip, but enjoys advantages in time-to-market, technology maturity and cost structure.
TSMC’s 2-nanometer chip with a backside-power-rail design would outperform the N3P and 18A chips, he added.
TSMC said that it is making progress on infrastructure, utilities and equipment installation at its first US fab in Arizona, as the chipmaker targets mass production of 4-nanometer chips there by the first quarter of 2025.
In Japan, its first fab in Kumamoto is to enter mass production of specialty chips late next year as scheduled, it said.
The fab would utilize its 28-nanometer, 22-nanometer, 16-nanometer and 12-nanometer technologies, it said.
In Europe, TSMC plans to start building a factory in Dresden, Germany, in the second half of next year, with mass production set in late 2027, it said.
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