TSMC bullish on outlook as AI boom blows Q3 profit past forecasts

TSMC, the world’s largest contract chipmaker, bet on sustaining its strong growth, after reporting on Thursday a forecast-beating 54% jump in quarterly profit driven by soaring demand for chips used in artificial intelligence (AI).

Taiwan Semiconductor Manufacturing Co, the dominant producer of advanced chips used in AI applications whose customers include Apple and Nvidia, has benefited from a surge towards AI across a spectrum of industries.

TSMC estimated its capital spending in the current quarter would more than double to around $11.5 billion and that the budget was likely to increase further next year, as it expects healthy demand for its products.

It said 2024 full-year revenue will grow close to 30% in U.S. dollar terms, compared to a previous guidance of slightly above the mid-20% range.

TSMC said revenue from AI processors is set to account for mid-teens percentage of its overall revenue this year.

“The demand is real,” Chairman and CEO C.C. Wei told an earnings call, referring to AI and adding it would last for many years.

The company’s robust performance and outlook underscore the continued strong demand for AI, after some industry watchers raised doubts following a lower than expected 2025 sales outlook earlier this week from ASML, the world’s biggest chipmaking equipment supplier.

At its quarterly earnings call on Thursday, TSMC said it expects capital expenditure for this year at slightly higher than $30 billion, compared with a previous forecast of $30 billion-$32 billion, as it races to expand production.

Capital expenditure for 2025 was likely to be higher than this year, TSMC said, although it did not provide a figure.

It said next year looks to be “healthy”, and forecast a similar outlook for the next five years.

Piter Yang, a fund manager of Fuh Hwa Securities Investment Trust, said TSMC’s results had wiped away concerns about the industry that had been sparked by ASML’s earnings.

“TSMC is a dominant company,” he said. “It is the only one with advanced process technologies that won’t be found at companies like Intel or Samsung.”

TSMC is spending tens of billions of dollars building new factories overseas, including $65 billion on three plants in the U.S. state of Arizona, though it has said most manufacturing will remain in Taiwan.

It said on Thursday it expects its first fab in Arizona to see volume production in 2025, while its second fab there should start volume production in 2028. It forecasts the third Arizona fab to begin volume production by the end of the decade.

The Taiwan chipmaker said it expected fourth-quarter revenue of $26.1 billion-$26.9 billion, up from $19.62 billion in the same period of 2023.