(Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s revenue rose 45% in July, accelerating the pace of growth from the June quarter and raising hopes of continued strong demand for artificial intelligence chips from companies such as Nvidia Corp.
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Revenue for the month reached NT$256.95 billion (US$7.9 billion). For the third quarter, analysts are forecasting TSMC’s revenue to rise 37% to NT$747.4 billion, with July results suggesting TSMC could beat those expectations.
Taiwan’s largest company is one of the key indicators of AI demand as it is the chipmaker of choice for leading accelerator makers Nvidia and Advanced Micro Devices Inc. It is also the sole supplier of processors for Apple Inc.’s iPhones, at a time when the mobile device market is showing signs of recovery from post-Covid-era lows. Last month, the world’s largest contract chipmaker raised its full-year growth forecast above the maximum 20% previously forecast.
TSMC gave an optimistic assessment of its business and prospects in its last earnings report. CEO CC Wei hinted that the company may have room to raise prices as more of its customers switch to cutting-edge technology and have to compete for limited capacity. High-performance computing, led by AI, contributed 52% of TSMC’s revenue last quarter, the first time it has accounted for more than half.
Still, investors are increasingly questioning whether the billions of dollars that major technology companies have invested in infrastructure to support the AI boom will actually yield meaningful returns. At the same time, a possible delay in Nvidia’s development of a new generation of AI chips is fueling concerns about the progress of the new technology.
Concerns about the global economic outlook last week interrupted the AI rally that had seen major players like TSMC gain billions in market value. Investors decided to sell some of the year’s biggest winners, sending TSMC shares down 10% in one day. However, the company largely recovered in the days that followed as asset managers saw a good buying opportunity.
– With support from Vlad Savov.
(Updated with additional details from TSMC’s latest earnings report)
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