TSMC Expected to Report Significant Q2 Profit Surge

Taiwan Semiconductor Manufacturing Co (TSMC), the leading producer of advanced chips for AI applications, is anticipated to announce a 30% rise in second-quarter profit on Thursday, driven by soaring demand for its products.

Financial Performance by TSMC:

TSMC, the world’s largest contract chipmaker with clients including Apple and Nvidia, is set to report a net profit of T$236.1 billion ($7.25 billion) for the quarter ending June 30, according to a SmartEstimate by LSEG derived from 20 analysts. This expected profit significantly surpasses the T$181.8 billion net profit from the second quarter of 2023.

Last week, TSMC reported a substantial increase in second-quarter revenue, surpassing market expectations. This surge in revenue has propelled TSMC’s stock, along with the broader Taiwan market, to record highs. TSMC’s American Depositary Receipts recently surpassed a trillion-dollar market value.

Future Projections:

“I expect the third quarter outlook for all of their products to be very good,” stated Li Fang-kuo, Chairman of President Capital Management Co. TSMC will provide updates on its outlook for the current quarter and the full year, including capital expenditure plans, during its quarterly earnings call at 0600 GMT on Thursday.

TSMC is investing billions in building new factories overseas, including $65 billion on three plants in Arizona, USA. Despite this, the majority of manufacturing will remain in Taiwan.

In April, TSMC maintained its guidance for capital spending this year at $28 billion to $32 billion, with 70% to 80% allocated to advanced technologies.

“TSMC could raise their capital spending,” suggested Chu Yen-min, Chairman of KGI Securities Investment Advisory Co. “There are many positive factors which will help their stock price and support the broader market.”

AI and Market Influence:

The AI boom has significantly boosted the price of shares in TSMC, Asia’s most valuable company. TSMC’s Taipei-listed stock has surged 75% this year to historic highs, compared to a 33% gain for the broader market.

TSMC is called the “sacred mountain protecting the country” due to its crucial role in Taiwan’s export-dependent economy. While it currently faces little competition, both Intel and Samsung strive to challenge its dominance.