TSMC Beats Forecasts With a Sharp Rise in Third-quarter Sales

Taiwan Semiconductor Manufacturing Co. (TSMC) surpassed expectations in its third-quarter revenue, highlighting the ongoing demand for high-tech chips fueled by the artificial intelligence (AI) boom. The Taiwanese chipmaker, a key supplier of advanced semiconductors for Apple and Nvidia, posted September sales of NT$251.87 billion (around $7.82 billion), marking a significant 39% year-over-year increase compared to the same month in 2023.

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This impressive boost in sales lifted TSMC’s total third-quarter revenue to NT$753.61 billion (about $23.41 billion), representing a 12% increase compared to its performance in the same quarter last year. TSMC’s strong performance exceeded its own projections, which anticipated revenues between $22.4 billion and $23.2 billion for the third quarter of 2024. TSMC reports its sales figures in Taiwanese dollars, but its financial guidance is provided in U.S. dollars.

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In addition to surpassing its internal expectations, TSMC also outperformed the consensus estimate of 25 analysts surveyed by FactSet. Analysts had predicted that the company would achieve sales of NT$748.15 billion (approximately $23.24 billion) for the third quarter. TSMC’s actual revenue exceeded that forecast by a comfortable margin, demonstrating its continued strength in the semiconductor market.

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TSMC’s stock reflected this positive momentum. Shares of the company, which are traded on the Taipei Stock Exchange, rose 1% on Wednesday and had already seen an impressive 88% increase over the past 12 months. Meanwhile, TSMC’s American Depository Receipts (ADRs), listed on the New York Stock Exchange, also gained 1% during Tuesday’s trading session, having surged by 102% over the previous year. These stock market gains underscore the market’s confidence in TSMC’s ability to capitalize on the growing demand for its chips.

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Founded in 1986 and headquartered in Hsinchu, Taiwan, TSMC has become a critical player in the global semiconductor industry. The company's success has been amplified by the AI revolution, particularly since the launch of ChatGPT in November 2022. The demand for high-performance semiconductors from companies involved in AI has fueled a surge in TSMC’s sales, as its chips are essential for the processing power required by AI-driven technologies.

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The AI boom has not only benefited TSMC but also its key clients, such as Nvidia, which relies on TSMC’s advanced chips for its graphics processing units (GPUs). These GPUs are vital components in AI systems and data centers, and the growing adoption of AI across various industries has led to an increase in demand for Nvidia’s products, further driving TSMC’s revenue growth.

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Looking ahead, TSMC is expected to release its complete third-quarter earnings report on October 17. In addition to its already reported revenue growth, the company is forecasting an improvement in its profit margins. This potential increase in profitability is likely due to the company’s ability to maintain its leadership position in the semiconductor market while benefiting from the AI-driven surge in demand for advanced chips.

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TSMC’s ability to outpace its own forecasts and exceed analysts’ expectations reflects its strategic positioning in the semiconductor industry. As the main supplier of cutting-edge chips to leading technology companies, TSMC plays a pivotal role in enabling advancements in AI, smartphones, and other high-tech applications. The company's investments in research and development, along with its focus on producing state-of-the-art chips, have helped it stay ahead of competitors and meet the growing needs of its clients.

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Despite its strong performance, TSMC, like many semiconductor manufacturers, faces challenges. The global semiconductor industry is highly competitive, and TSMC must continue to innovate to maintain its dominance. Additionally, the company operates in a complex geopolitical environment, with tensions between Taiwan and China posing potential risks to its operations. However, TSMC has demonstrated resilience in navigating these challenges and remains a key player in the global tech supply chain.

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The ongoing demand for AI-related technologies is likely to continue driving TSMC’s growth in the foreseeable future. As more companies integrate AI into their operations, the need for high-performance semiconductors will only increase, positioning TSMC to further capitalize on this trend. Additionally, the company’s close relationships with major clients like Apple and Nvidia provide a strong foundation for sustained revenue growth.

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In conclusion, TSMC’s third-quarter results showcase its ability to exceed expectations in a rapidly evolving tech landscape. The company’s success is closely tied to the AI boom, which has created unprecedented demand for its advanced chips. As TSMC prepares to release its full third-quarter earnings report, investors are optimistic about the company’s future prospects, particularly as it expects to report higher profit margins. With its strong market position and continued focus on innovation, TSMC is well-positioned to remain a leader in the semiconductor industry.

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