Taiwan Semi June sales outpace expectations
Taiwan Semiconductor Manufacturing Co. (TSM) reported impressive financial results for June 2024, with net revenue amounting to approximately NT$207.87 billion ($6.38 billion). This represents a 32.9% increase from June 2023, although it marked a 9.5% decrease from May 2024. Despite the month-over-month decline, the significant year-over-year growth underscores strong demand for TSMC's advanced chip manufacturing capabilities. For the first half of 2024, TSM's total revenue reached NT$1,266.15 billion, an increase of 28.0% compared to the same period in 2023, highlighting the company’s robust performance over the long term.
The market reacted positively to TSM's strong sales figures, particularly given the company's pivotal role in supplying high-performance chips for artificial intelligence (AI) applications. Shares of TSM rose by 2.1% in premarket trading, reaching $188.35, reflecting investor confidence in the company's growth trajectory. This increase comes on the heels of a significant year-to-date gain of 77%, indicating sustained bullish sentiment towards TSM driven by its dominance in the advanced chip market.
The better-than-expected sales performance was primarily attributed to the high demand for AI-related chips. TSM’s advanced process nodes, including 3-nanometer and 2-nanometer chips, are crucial for powering next-generation AI applications and smartphones. The strong sales figures were well above the market expectations of $5.73 billion, further cementing TSMC's position as the leading manufacturer in the high-end semiconductor space.
The ripple effects of TSM’s robust sales were felt across the tech sector. Shares of key customers like Nvidia and Apple also saw gains, with Nvidia rising by 1.5% to $133.28 in premarket trading and Apple climbing 0.9% to $230.79. Other semiconductor companies, including Advanced Micro Devices (AMD), also benefited, with AMD shares increasing by 1.4%. This positive market reaction underscores the broader industry's reliance on TSM's cutting-edge chip manufacturing capabilities.
Analysts and investors are particularly focused on TSM’s upcoming second-quarter earnings report, scheduled for July 18, where the company is expected to detail further insights into its financial performance. According to FactSet, analysts anticipate TSM to earn $1.40 per U.S. share on sales of $20.14 billion for the June quarter. Early indications suggest that TSM's actual second-quarter sales might surpass these expectations, potentially leading to an upward revision of the company’s full-year sales outlook.
Looking ahead, TSM's ability to meet the growing demand for AI chips positions it well for continued market leadership. The company plans to raise prices for its advanced process nodes by 5% to 8% starting in the first quarter of 2025, driven by heightened demand. This price increase could bolster TSM’s revenue further, benefiting shareholders and solidifying its competitive edge. Moreover, as companies like ASML prepare to deliver advanced chipmaking machines to TSM, the technological advancements are expected to support TSM's capacity expansion and innovation in AI applications, maintaining its dominance in the semiconductor industry.