TSMC Surges with 34% Sales Boost as AI Drives Demand and 2nm Chips Loom

Taiwan Semiconductor Manufacturing Company (TSMC) reported a significant rise in November sales, growing by 34% year-over-year to 276.1 billion New Taiwan Dollars (approximately $8.5 billion USD). This increase reflects enduring demand for artificial intelligence (AI) applications, despite concerns about potential slowdowns in data center construction. Cumulatively, sales for October and November saw a 31.4% growth, aligning closely with the analysts' forecast of 36.3% growth for the quarter.

As a leader in AI data center architecture, TSMC has greatly benefited from substantial investments by tech giants like Microsoft and Amazon in server infrastructure and data centers since the introduction of ChatGPT in late 2022. However, there is rising investor anxiety regarding the profitability of these investments, given the current absence of a breakthrough AI application.

Industry expert Charles Shum predicts that TSMC may gain pricing power in the future due to its competitive edge over rivals such as Samsung Electronics and Intel, which have struggled to secure chip production contracts.

TSMC's third-quarter financial results further underline its robust performance, with revenues climbing 36% year-over-year to $23.5 billion. The earnings per share (EPS) for the same period also exceeded expectations, reaching $1.94 compared to $1.29 in the previous year. The firm continues to outpace market consensus with its EPS across recent quarters.

Looking ahead, market projections are optimistic about TSMC's financial trajectory. Analysts anticipate the current quarter's EPS to rise to $2.14, marking an appreciation of 48.6% from the previous year. For the full fiscal year, earnings are expected to reach $6.95 per share, a 34.2% increase from last year, while the next fiscal year is predicted to see EPS climb to $8.86, a 27.5% increase from current levels.

On the technological front, TSMC is set to start mass production of its 2nm chips next year. Currently undergoing trial production, the 2nm process at TSMC's Hsinchu plant has already achieved a yield rate exceeding 60%, far surpassing internal expectations. This places TSMC at a distinct advantage in terms of technology and production capabilities, with yields expected to improve further before entering large-scale production.

Customer commitments further boost confidence, with Apple reportedly securing the initial batch of TSMC's 2nm capacity. Other customers, driven by AI demands, are also making strategic plans with TSMC, contributing to a positive outlook for the company's future operations.