Taiwan Semiconductor Manufacturing Co. (TSMC) reported a 45% surge in revenue for July, driven by the growing global demand for artificial intelligence (AI) chips and robust orders from tech giants like Apple, Nvidia, and Intel. The company's sales reached NT$256.95 billion ($7.9 billion), marking one of the strongest months in its history and setting a new record as it capitalizes on the booming AI and mobile device markets.
TSMC, the world's largest contract chipmaker and a critical supplier for some of the biggest names in technology, has been at the forefront of the AI revolution. As the primary manufacturer for Nvidia's AI accelerators and Apple's processors, the company's performance is often seen as a bellwether for the broader tech industry. July's impressive figures suggest that demand for AI and high-performance computing chips remains robust, even as concerns over the global economic outlook continue to linger.
The company's growth in July represents a significant acceleration from the previous quarter, with analysts projecting that TSMC could exceed expectations for the third quarter. According to Bloomberg Intelligence analyst Charles Shum, TSMC's 44.7% year-over-year sales surge aligns with projections for a robust third-quarter performance, driven by strong demand for 3-nanometer production orders from Apple, Qualcomm, and MediaTek. Shum noted that TSMC is well-positioned to surpass the high end of its $23.2 billion third-quarter sales guidance.
The July revenue figures come on the heels of TSMC's decision to raise its full-year growth outlook beyond the previously guided mid-20% range. This optimistic outlook reflects the company's confidence in the sustained demand for its most advanced chip technologies, particularly in AI and high-performance computing sectors. In the last quarter, AI-related chips alone accounted for 52% of TSMC's revenue, marking the first time these products have made up more than half of the company's sales.
Despite the strong performance, TSMC's shares experienced volatility amid broader market concerns. Investor sentiment was rattled by global economic worries and the potential for delays in Nvidia's development of a new generation of AI chips. TSMC's stock fell by 10% in a single day last week as investors cashed out on some of the year's biggest gainers. However, the stock quickly recovered much of its losses as market participants recognized the dip as a buying opportunity.
TSMC's success is not confined to AI alone. The company has also benefited from a resurgence in demand for mobile devices, with Apple ramping up orders ahead of its next iPhone release. TSMC's advanced 3nm and 5nm process technologies have seen increased capacity utilization, signaling strong demand across multiple sectors. The company expects this momentum to continue into the third quarter, with projected revenues ranging between $22.4 billion and $23.2 billion, reflecting a quarter-on-quarter growth of up to 11.43%.
Looking ahead, TSMC has ambitious plans to expand its global footprint. The company is set to break ground on its new European Semiconductor Manufacturing Company (ESMC) plant in Dresden, Germany, later this month. This expansion follows recent moves in the United States and Japan, highlighting TSMC's commitment to meeting the growing demand for its cutting-edge semiconductor technologies.
However, TSMC is not without its challenges. The company is currently embroiled in a patent infringement lawsuit filed by Advanced Integrated Circuit Process LLC (AICP) in the Eastern District of Texas. TSMC has dismissed the lawsuit as a typical case of "patent trolling" and has vowed to vigorously defend its technology through the legal system. The company has invested billions of dollars in developing industry-leading patents, spending $5.8 billion in 2023 alone, and remains confident in its legal position.
