AI boom fuels earnings surge at TSMC

17th Oct 2024 07:22

(Sharecast News) - Shares in Taiwan Semiconductor Manufacturing Co rallied on Thursday, after the Taiwanese giant posted a forecast-beating 54% surge in earnings, fuelled by the boom in artificial intelligence.

The Taipei-based company said third-quarter consolidated revenues rose 39% year-on-year, to 759.7bn new Taiwanese dollars (£18.2bn)

Net income and diluted earnings per share, meanwhile, both soared 54%, to NT$325.3bn and NT$12.54 respectively. Analysts had expected net income to come in around NT$300.2bn.

TSMC is a leading producers of the advanced chips needed to power AI. Clients include Nvidia and Apple, among many others.

Shipments for its 3-nanometer chips accounted for 20% of total wafer revenue, while 5nm chips accounted for 32%.

Wendell Huang, chief financial officer, said: "Our business was supported by strong smartphone and AI-related demand for our industry leading 3nm and 5nm technologies.

"Moving into fourth quarter, we expect our business to continue to be supported by strong demand for our leading-edge process technologies."

During an earnings call, chief executive CC Wei said AI demand was "real", and that the company seeing "the deepest and widest growth of anyone in this industry.

"We have talked to our customers all the time, including our hyperscaler customers who are building their own chips. And almost every AI innovator is working with TSMC."

The firm expects fourth-quarter revenues to come in between US$26.1bn and US$26.9bn, giving it a gross profit margin of between 57% and 59%. Third-quarter revenues in US dollars were $23.5bn, a 36% jump year-on-year.

It also anticipates capital spending to more than double to around $11.5bn in the current quarter.

As at noon, TSMC's New York-listed shares had put on nearly 9% in pre-market trading.