Taiwan Semiconductor Manufacturing Co. (TSMC) has issued a revenue outlook surpassing expectations, affirming plans to invest up to $32 billion in 2024, reinforcing anticipations of continuous growth in artificial intelligence (AI) demand.
This optimistic forecast comes on the heels of TSMC’s first quarterly profit increase in a year, driven by robust AI demand, revitalizing growth at Asia’s largest company.
As the primary chip supplier for Nvidia Corp. and Apple Inc., TSMC anticipates revenue ranging from $19.6 billion to $20.4 billion in the June quarter, surpassing estimates of approximately $19.1 billion.
The provided outlook is likely to ease concerns among some investors regarding the sustainability of AI demand and the delayed recovery of the smartphone market.
TSMC recently reported its fastest sales growth since 2022, indicating a growing demand for chips essential for AI development, offsetting the downturn in the smartphone market.
Notably, Apple, which contributed around a quarter of TSMC’s revenue in 2023, experienced a significant decline in iPhone sales at the beginning of the year.
However, TSMC CEO C. C. Wei acknowledged revising downward the semiconductor market growth expectations for 2024—excluding memory chips—to approximately 10%, down from previous projections.
He also adjusted growth forecasts for the foundry sector, which TSMC leads, yet maintained the expenditure projections of $28 billion to $32 billion on capacity expansion and upgrades for the year.
Wei cautioned analysts during a conference call, highlighting lingering uncertainties stemming from macroeconomic and geopolitical factors, which could potentially impact consumer sentiment and end-market demand throughout 2024.
Despite these uncertainties, TSMC remains optimistic about achieving revenue growth of at least 20% this year, driven by the broader semiconductor market’s recovery.
However, ongoing global macroeconomic volatility adds to the uncertainty. ASML Holding NV, a crucial supplier and the sole provider of the world’s most advanced chipmaking machines reported a 22% shortfall in first-quarter bookings on Wednesday.
In terms of technological advancements, TSMC disclosed plans to commence mass production of next-generation 2nm chips in the final quarter of 2025, narrowing the timeline compared to previous projections.
Additionally, Wei noted a decline in TSMC’s automotive business for the year, contrary to earlier forecasts for growth, without providing further details.
