Taipei, Taiwan – Taiwan Semiconductor Manufacturing Co. reassured investors with a positive revenue forecast, reflecting a steady surge in demand for artificial intelligence (AI) technology. The company’s optimistic outlook came after a strong performance in the first quarter, driven by robust demand for AI-related products.
With revenue projected to reach between $19.6 billion and $20.4 billion in the June quarter, TSMC exceeded expectations of about $19.1 billion. This promising forecast allays concerns of a potential slowdown in AI demand or a delayed recovery in smartphone sales. The company’s recent rapid sales growth indicates a shift towards AI-driven technology, compensating for the decline in the smartphone market, exemplified by Apple’s initial drop in iPhone sales this year.
Despite lowering expectations for semiconductor market growth in 2024 to around 10%, TSMC remains resolute in its commitment to spend between $28 billion and $32 billion on factory expansions and upgrades this year. While uncertainties loom amid macroeconomic and geopolitical challenges, TSMC’s CEO, C.C. Wei, expressed confidence in sustained revenue growth of at least 20% in 2024.
Looking ahead, TSMC plans to commence mass production of next-generation 2nm chips by the last quarter of 2025, earlier than previously anticipated. The company also anticipates a decline in its automotive business this year, deviating from prior expectations of growth. Despite these shifts, TSMC’s continued success since a market low in 2022 highlights its position as a frontrunner in the AI development industry.
The recent earthquake in Taiwan caused minor disruptions to TSMC’s chip production, affecting gross margins in the June quarter. However, with a 9% increase in net income for the March quarter and a promising trajectory in AI chip revenue, the company remains poised for further growth. While some investors raise concerns about the sustainability of current AI chip demand, TSMC remains focused on scaling its capacity to meet future needs, aiming to address shortages in the market.
In conclusion, TSMC’s resilience and adaptability amidst global challenges underscore its pivotal role in driving innovation and shaping the future of AI technology. As the company navigates uncertainties and explores new opportunities, its commitment to technological advancement positions it as a key player in the evolving landscape of semiconductor manufacturing.