Taiwanese Chip Giant Anticipates Over 20% Revenue Surge Amidst Robust AI Market
In a bullish projection, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, is eyeing more than a 20% growth in revenue for 2024. The optimistic forecast is attributed to the soaring demand for high-end chips crucial for artificial intelligence (AI) applications, positioning TSMC as a key enabler in the AI landscape.
The AI Opportunity
TSMC, a major supplier for tech giants like Apple Inc and Nvidia, sees AI as a substantial growth opportunity. CEO C.C. Wei emphasized the company’s role in fueling AI innovations, stating, “We are a key enabler for AI applications. So far today, everything you saw for AI comes from TSMC.” This announcement follows TSMC’s robust financial performance in the fourth quarter, surpassing market expectations.
Advanced Packaging and Over-Capacity Concerns
Demand for advanced packaging is witnessing a significant surge, with TSMC struggling to meet the capacity required to support customers. However, Wei expressed concerns about potential over-capacity in the broader industry, particularly for mature nodes. Despite this worry, TSMC remains confident due to strong customer demand for its specialty technologies.
Global Expansion Plans
Looking ahead, TSMC is set to expand its global manufacturing footprint. Construction at its fab plant in Germany is slated to commence in the fourth quarter of 2024. Additionally, the company is evaluating the technology node for a second fab in Arizona. A first fab in Japan is set to open next month, with volume production expected in the fourth quarter.
Capital Spending and Revenue Projections
TSMC anticipates a capital spending range of $28-$32 billion for 2024, aligning with the figures from the previous year. The company also plans to expand production in its home base in Taiwan. With an eye on the future, TSMC is evaluating the possibility of building a third fab in Kaohsiung, Taiwan, catering to advanced 2 nanometre chips.
Financial Performance and Market Outlook
Despite a 19% drop in net profit for the October-December quarter, TSMC’s profit exceeded market estimates. The company attributed its performance to the strong ramp of its industry-leading 3-nanometer technology. TSMC remains optimistic about 2024, forecasting solid growth and expecting inventories to return to a healthy level.
TSMC’s bullish outlook reflects the pivotal role it plays in driving innovation, particularly in the dynamic landscape of artificial intelligence. As the demand for high-end chips continues to surge, TSMC positions itself for substantial growth and technological advancements.
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Credit: Yimou Lee and Faith Hung