TSMC's revenue increased by 33%

Taiwan Semiconductor Manufacturing Co., Ltd. saw a 33% increase in revenue last month, which is a positive signal for investors betting on the recovery of the smartphone market and sustained demand for Nvidia's artificial intelligence chips.

Data shows that sales in August reached NT $250.9 billion (US $7.8 billion), lower than the previous month's growth rate of 45%. TSMC's revenue in the third quarter is expected to increase by 37%, continuing the recovery momentum from the low point after the pandemic in 2023.

Although this is only a snapshot of a month, the results may alleviate concerns about whether the market has overestimated the sustainability of AI infrastructure spending. On September 3rd, Nvidia's announced earnings did not meet its highest expectations, causing the company's stock price to drop by approximately $279 billion, marking the largest single day decline.

This means that TSMC's third quarter revenue is expected to slightly exceed average expectations. If the performance in September is in line with the average seasonality of the past 8 years, then 3Q24 revenue will be 5% to 6% higher than the expected median and consensus.

This largest company in Taiwan currently generates over half of its revenue from high-performance computing, a business area driven by the demand for artificial intelligence.

TSMC made an optimistic assessment of its business and prospects during its last performance announcement. In July of this year, the world's largest chip foundry raised its full year growth forecast to over 20%, the highest previously expected.

TSMC expects its revenue for the third quarter of 2024 to be between $22.4 billion and $23.2 billion, with a month on month growth of 9.5% and a median year-on-year growth of 32%. TSMC previously expected that advanced process technologies in the 5-nanometer and 3-nanometer series would be popular, benefiting from opportunities related to mobile phones and AI.