By
Bhushan Akolkar
April 12th, 2024
TSMC is also expanding a factory under construction in Arizona to develop better chips for iPhones and subsequently drive sales.
Taiwan Semiconductor Manufacturing Company (TSMC) reported higher sales than expected as the company enjoys a boom caused by a demand for artificial intelligence (AI) tools and applications.
According to Bloomberg calculations, TSMC’s Q2 sales for June were NT$156.4 billion, with revenue at NT$480.08 billion – around $15.3 billion. Although this puts TSMC’s revenue at a 10% reduction compared to the previous year, it still beats the NT$476.2 billion analysts expected.
As of press time, TSMC was trading at $99.62 on the New York Stock Exchange, slightly lower than its previous close of $100.23. The company’s stock has lost 2.83% in the last 5 days and more than 6% in 1 month. However, TSMC stock has climbed over 12% in 3 months, nearly 27% in one year, and more than 34% since January. However, regardless of the tapered outlook, TSMC Chairman Mark Liu said the company can withstand the drop. Liu said TSMC would lose some sales this year, but “capture strong growth starting next year”.
TSMC stock’s rise this year is commendable, especially considering the company’s minimized outlook. Last month, TSMC reduced its capital expenditure outlook and said revenue for the first half of 2023 would fall by 10% in dollar terms.
Analysts at financial services giant Goldman Sachs (NYSE: GS) have increased their target to NT$700. According to Evelyn Yu and Bruce Lu:
“We view TSMC as the key AI enabler among our Taiwan semi coverage thanks to its leadership stance in leading edge nodes and advanced packaging technology.”
TSMC Sales Record
In January, TSMC reported record sales for the 2022 financial year, at NT$2.26 trillion, about US$75.23 billion at the time. The reported figure was a 42.6% jump from the previous financial year.
The report also included other pointers to an impressive performance, including a 43% jump in the company’s Q4 revenue reported at NT$625.5 billion – $20.6 billion at the time. Although the company’s revenue climbed, the figure was less than the NT$636 billion analysts’ expected.
As figures improve, TSMC plans to expand manufacturing, announcing a $40 billion investment into an ongoing construction of a plant in Phoenix, Arizona. According to a New York Times report, the expansion at the site will help to ensure that TSMC can manufacture chips usable for iPhones. These chips would be able to handle up to 17 trillion specialized calculations per second. In addition, TSMC intends to build a second factory sometime later, for more advanced production targeted at future devices.
While all of TSMC’s plans seem to prepare the company for growth that eventually spikes sales, the project is causing internal tensions. According to a report, some employees believe the project would divert the company’s attention from the research and development that helped TSMC attain its current successes. There are also worries about a move to the US because of a possible culture clash.