TSMC Sales Surge 45% in July Driven by AI Chip Demand
Key Points
- TSMC reported July revenue of 467.58 billion new Taiwan dollars ($14.5 billion), a 44.7% increase year-over-year.
- High-performance computing, where AI chip sales are booked, accounted for 66% of TSMC's second-quarter revenues.
- TSMC raised its 2024 capex projection to between $60 billion and $64 billion and guides for 40% revenue growth this year.
TSMC's Expansion and Capital Commitments
Ben Barringer, head of technology research at Quilter Cheviot, told CNBC that July's numbers position TSMC favorably for the remainder of the year. "July's numbers put it ahead of that figure. This is no mean feat and highlights that for now demand is still there and takes the pressure off August and September somewhat in that these two months don't have to be as aggressive," Barringer said.
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TSMC has committed to substantial capital investments to support continued production growth. The company raised its capital expenditure projection to between $60 billion and $64 billion for 2024, reflecting confidence in sustained demand and preparation for long-term growth. The company also provided forward guidance indicating it expects 2026 revenue to increase by slightly above 40% in U.S. dollar terms.
TSMC's performance has resonated across semiconductor markets. European semiconductor stocks rose on Monday following the announcement, with ASML gaining more than 2%, while Infineon and STMicro also traded higher. However, the broader semiconductor sector has experienced volatility, with the PHLX Semiconductor index down around 15% from its June high, though the index remains up 72% for the full year.
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TSMC's own stock reflects investor confidence despite sector-wide uncertainty, with shares up 50% for the year. Barringer cautioned that semiconductor demand can shift quickly, advising against reading too much into monthly figures given their volatility. The company does not provide official commentary on monthly revenue data.
TSMC's expansion occurs amid investor scrutiny of Big Tech spending on artificial intelligence infrastructure. Major technology firms continue to funnel unprecedented capital into building AI systems, designing semiconductors, and purchasing chips from manufacturers like TSMC. The company's sales figures serve as a closely watched metric of actual technology sector demand for semiconductors, distinguishing them from forward-looking capital commitments that may not translate to near-term revenue.
For investors and industry observers, TSMC's July results demonstrate that current demand for AI-related semiconductors has not yet contracted, despite concerns about whether major technology companies will achieve returns on their massive infrastructure investments. The company's guidance for continued 40% growth in 2024 and above-40% growth in 2026 suggests TSMC expects this demand environment to persist.
What This Means
TSMC's July results and raised capital expenditure guidance suggest the company expects AI chip demand to sustain through at least 2026. If the high-performance computing segment maintains its 66% revenue contribution, TSMC could exceed $20 billion in quarterly revenues by 2025. However, semiconductor demand historically shifts rapidly; a pullback in Big Tech AI spending could force TSMC to moderate expansion plans within quarters.
Sources: CNBC and other international news outlets.
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