TSMC (Taiwan Semiconductor Manufacturing Company) explained how its third quarter revenue increased 36% to $23.5 billion.
The Taiwanese semiconductor maker said it expects fourth-quarter sales of $26.1 billion to $26.9 billion, up from $19.62 billion in the same period in 2023.
TSMC has increased its revenue in recent quarters due to strategic moves driven by a surge in demand for advanced chips, particularly in AI and smartphones.
Canalys research analysts said global smartphone shipments increased by 5% in the third quarter of 2024, marking the fourth consecutive quarter of growth.
Gartner analysts say the AI chip market is expected to grow 33% to $71 billion in 2024.
AI boom: TSMC benefited greatly from the growing demand for AI-related chips. AI processors currently account for mid-teens of total revenue. Major customers such as Apple and Nvidia leverage TSMC’s advanced chips for AI applications, driving demand across the industry. Apple has an 18% share of the global smartphone market in the third quarter of 2024.
Advanced technology: TSMC’s advantages in advanced semiconductor manufacturing, including 3nm and 5nm process technologies, are a key driver of growth. These technologies are in high demand for advanced smartphones and AI applications.
TSMC said 3-nanometer shipments accounted for 20% of total wafer revenue. 5 nanometers accounted for 32%. 7 nanometers accounted for 17%. Advanced technologies, defined as advanced technologies 7 nanometers and above, accounted for 69% of total wafer revenue.
Capital Investment: TSMC increased capital investment to expand production capacity. TSMC’s capital expenditures are expected to exceed $30 billion in 2024, with further increases expected in 2025. This investment will support the company’s growth and position it to meet future demand. TSMC said its capital expenditures in the third quarter were $6.4 billion, compared to $6.36 billion in the second quarter.
Overseas expansion: TSMC is building a new fab (manufacturing plant) overseas, particularly in the United States (Arizona), with production scheduled to begin in 2025. These overseas factories will help TSMC meet global demand and increase its presence in key markets.
Record profits: TSMC reported record profits of $10.11 billion in Q3 2024, up 54% year over year, driven by increased revenue from AI and smartphone markets.
Overall, TSMC’s leadership in advanced chip manufacturing, large capital investments, and strategic expansion has led to strong revenue growth, especially with the AI boom.
Baburajan Kijakedas
