Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted a better-than-expected 39 percent rise in quarterly revenue, assuaging concerns that artificial intelligence (AI) hardware spending is beginning to taper off.
The main chipmaker for Nvidia Corp and Apple Inc reported third-quarter sales of NT$759.69 billion (US$23.6 billion), compared with the average analyst projection of NT$748 billion.
For last month alone, TSMC reported revenue jumped 39.6 percent year-on-year to NT$251.87 billion. Taiwan’s largest company is to disclose its full third-quarter earnings on Thursday next week and update its outlook.
Photo: CNA
Hsinchu-based TSMC produces the cutting-edge chips needed to train AI. The company now makes more than half of its revenue from high-performance computing, the segment of its business driven by AI demand.
However, views have begun to diverge in recent months on whether the AI-driven growth momentum would last.
Some investors have cautioned that the likes of Meta Platforms Inc and Alphabet Inc’s Google cannot sustain their current pace of infrastructure spending without a compelling and monetizable AI use case. That skepticism has led to a pullback in AI stocks, including flag bearer Nvidia, in recent months.
Still, TSMC shares have more than doubled since the launch of ChatGPT in late 2022, with its market capitalization briefly crossing the US$1 trillion mark in July. That month, the company also lifted its outlook for this year’s revenue growth after quarterly results beat estimates.
The revision underscored TSMC’s view that AI spending would remain elevated despite growing US-Chinese trade tensions. In both countries, start-ups and tech firms from Microsoft Corp to Baidu Inc (百度) are splurging on AI infrastructure in a race to develop applications.
Some analysts worry that delays in the delivery of Nvidia’s latest Blackwell chips might disrupt the industry, although most investors do not view that as a long-term issue for TSMC. With Intel Corp and Samsung Electronics Co struggling to get ahead in the business of bespoke chipmaking, TSMC’s market leadership is expected to help prop up margins.
Nvidia’s key server assembly partner Hon Hai Precision Industry Co (鴻海精密) this week also reaffirmed that demand for its AI hardware remains solid.
Hon Hai chairman Young Liu (劉揚偉) on Tuesday said that his company plans to boost server production capacity to meet “crazy” demand for next-generation Blackwell chips, echoing similar remarks from Nvidia chief executive officer Jensen Huang (黃仁勳) earlier this month.
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