- TSMC’s Q3 revenue growth is fueled by high demand for advanced AI and smartphone chips.
- The company is investing over $30 billion in expanding global production facilities.
- Rising energy costs in Taiwan pose challenges but haven’t slowed TSMC’s growth momentum.
In its latest earnings call, Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) (TPE: 2330) (TSMC) showcased a strong performance for the third quarter of 2024, highlighting the company’s ability to thrive amidst a growing demand for advanced chips. As the world’s leading chipmaker, TSMC is riding the wave of increased interest in AI technologies and next-generation smartphones. With ambitious plans for global expansion and significant investments in cutting-edge technology, TSMC is positioning itself to capitalize on emerging opportunities while navigating challenges like rising energy costs.
Here are the five key takeaways from TSMC’s Q3 2024 earnings call that investors should know.
1. Strong Financial Performance in Q3 2024
TSMC delivered solid growth during the third quarter, with revenues rising by 12.8% from the previous quarter. This growth came largely from strong demand for TSMC’s 3-nanometer and 5-nanometer chips, which are crucial for AI processors and modern smartphones. The company also improved its profit margins through efficient cost management, resulting in a robust earnings performance.
2. Advanced Technology Leads the Way
TSMC’s advanced chips were the star performers, with 3-nanometer and 5-nanometer technologies driving significant sales. These chips accounted for 69% of TSMC’s total revenue, underscoring their importance in cutting-edge applications like AI and high-performance computing. The demand for these technologies shows no signs of slowing, contributing to a positive outlook for TSMC.
3. Positive Outlook for Q4 2024
Looking ahead, TSMC expects continued growth, projecting a 13% revenue increase in the fourth quarter. This is based on ongoing strong demand for its leading-edge chip technologies. The company’s leadership remains optimistic that its advanced manufacturing capabilities will keep pace with customer needs, allowing TSMC to maintain its momentum.
4. AI Demand Is Real and Growing
TSMC emphasized that the demand for AI chips is not just a short-term trend but a long-term opportunity. The company’s executives shared that AI applications are driving productivity and efficiency across various industries, making the demand for AI processors both strong and sustainable. TSMC’s extensive customer relationships in this space give it a unique insight into the future of AI, reinforcing its confidence in this growth area.
5. Strategic Investments and Global Expansion
To meet rising demand, TSMC is investing heavily in new production facilities. The company plans to spend over $30 billion in 2024 to expand its manufacturing capabilities, particularly in advanced chip technologies. This includes building new facilities (fabs) in Arizona, Japan, and Germany, which will help TSMC better serve its global customer base. While these expansions are costly, they are a strategic move to maintain TSMC’s leadership in the semiconductor industry.
Invest in TSMC for its position as the leader in advanced chip manufacturing
TSMC’s Q3 2024 earnings reveal a company well-positioned to leverage its strengths in advanced chip manufacturing while navigating challenges like rising energy costs in Taiwan. With a robust outlook for AI demand and ambitious plans for global growth, TSMC is laying the groundwork for continued success in the rapidly evolving tech landscape. Investors looking for a leader in innovation and market reach should keep a close eye on TSMC as it powers forward into the future.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
