TSMC's Stock Surge: Riding High on Revenue Growth and Market Optimism
2min read Taiwan Semiconductor Manufacturing Co. (TSMC) climbed 3.54% on the latest trading session, reflecting investor optimism. The broader market has shown mixed performances, with some stocks experiencing volatility amid economic data releases and global market fluctuations.
Recent developments around TSMC have showcased substantial progress and positive outlooks. For June, TSMC reported an impressive 33% surge in revenue, leading to a 3% uptick in its stock price. In addition, the company's quarterly sales posted a 40% increase, surpassing market expectations. This robust performance has been attributed to the ongoing strong demand in the global semiconductor sector. Moreover, TSMC's upcoming second-quarter earnings report on July 18 is highly anticipated by investors and analysts alike.
Delving into the specifics, TSMC's advanced node pricing exceeded market predictions, propelling the stock to new highs. During the early June Computex conference, market speculation about TSMC's price hikes emerged. Initially, analysts believed that only high-performance computing clients like Nvidia could absorb a 10% increase in wafer prices. However, it's now evident that other consumer electronics manufacturers might also face higher-than-expected price increases. This is underscored by the latest supply chain insights, which hint at capacity constraints for TSMC's advanced nodes by 2025. As a result, clients unwilling to accept higher prices might struggle to secure the required production capacity.
As for its key clients, Apple and Nvidia continue to be major contributors to TSMC's revenue streams, especially in supporting the infrastructure for AI. Recent reports indicate that due to the anticipated boost in iPhone shipments, TSMC's 3nm node is expected to operate at 110-115% utilization in the second half of 2024, while the 4nm and 5nm nodes are approaching full capacity.
On the pricing front, TSMC is projected to increase the average selling prices of its chips by 2025, with estimates suggesting a 4% hike for 3nm chips and an 11% hike for 4nm and 5nm chips. Conversely, the mature process nodes (16nm and above) are anticipated to maintain stable pricing, given their sufficient capacity. Analysts from major investment banks now forecast an overall 5% increase in TSMC's wafer business prices by 2025, a notable rise from the earlier 2% prediction.
Capital expenditure plans are also in focus, with expectations that TSMC might ramp up its spending to between $30 billion and $32 billion for the year, contingent on potential cost savings in equipment procurement. The company's revenue growth for 2024 is projected at approximately 20%, buoyed by sustained demand for AI technologies.
Despite rumors of a price reduction for TSMC's 7nm process, industry experts attribute this to the gradual migration of clients using older nodes to more advanced processes. In the first quarter, the 7nm node accounted for 19% of TSMC's revenue, a share expected to diminish as the 3nm capacity scales up next year.
In summary, TSMC's recent performance and strategic moves underscore its leading position in the semiconductor industry. The company continues to benefit from high demand across multiple tech sectors and aims to leverage its advanced technology to drive future growth.