TSMC’s quarterly profit jumps 60% on continued AI chip demand – News

Taiwan Semiconductor Manufacturing Co. today posted second quarter results that topped the consensus estimate across the board.

The world’s largest contract chipmaker saw its profit jump 61% year-over-year in the three months through June. TSMC closed the quarter with net income of 398.27 billion New Taiwan dollars, or $13.55 billion. Analysts had expected $12.86 billion.

TSMC’s revenue climbed 38% year-over-year to $31.7 billion, slightly higher than the consensus estimate. The sales growth was driven partly by the continued momentum of the company’s high-performance computing segment, which includes artificial intelligence and 5G networking chips. The segment accounted for 60% of TSMC’s second quarter revenue, up from 52% a year ago.

Many of the AI chips that customers order from the company are made using its latest manufacturing processes. According to TSMC, seven-nanometer and smaller nodes drove nearly three-quarters of its wafer revenue in the second quarter.

The company is building a $165 billion manufacturing campus in Arizona to meet U.S. customers’ for its advanced processes. The first fab on the site, which uses a four-nanometer node, began mass production late last year. Two more chip factories are set to start making chips by the end of the decade.

TSMC Chief Executive Officer C. C. Wei told investors today that the company is accelerating construction of the second and third fabs by “by several quarters” to meet demand. Earlier, the company disclosed that the Arizona campus’ manufacturing capacity is fully booked through the end of 2027.

The chipmaking giant broke ground on its third, most advanced fab in Arizona this past April. It will make chips using the company’s upcoming 1.6-nanometer process. The node includes a technology called Super Power Rail that boosts chips’ power efficiency by reducing voltage drops, or fluctuations in the amount of power delivered to a processor’s transistors.

TSMC’s Arizona campus is expected to host up to to six fabs once it’s fully operational. The company is also building a research and development hub, as well as two factories dedicated to making packaging components. Packaging is the technology used to link together multiple semiconductor modules into a single chip.

“After completion, around 30% of our two-nanometer and more advanced capacity will be located in Arizona, creating an independent, leading-edge semiconductor manufacturing cluster in the U.S.,” Wei told investors. 

TSMC expects to generate $31.8 billion to $33 billion in sales during the current quarter, which would represent a 38% increase at the midpoint. For the full year, the company has raised its revenue growth guidance from between 24% and 26% to 30%. Even so, it expects to miss the $124.9 billion projected by analysts. 

“Looking ahead to the second half of the year, we have not seen any change in our customers’ behavior so far,” Wei said. “However, we understand there are uncertainties and risks.”

Photo: TSMC