Chipmaker TSMC sees 36% growth in sales, 68% surge in June revenues amid sustained global demand for AI hardware

The Taiwan Semiconductor Manufacturing Company (TSMC) today said it has seen 36% rise in quarterly sales and reported 68% surge in June revenues amid sustained global demand for artificial intelligence (AI) hardware, according to a Bloomberg report.

Revenue for the three months ended June totaled NT$1.27 trillion ($39.6 billion), as per Bloomberg's calculations. These matched average estimates for TSMC by analysts, it added. The report said that “very strong” performance was recorded in June, with sales up 68% year-on-year basis in the same month the previous year.

TSMC is the world's largest contract semiconductor manufacturer, producing AI chips for giants Apple and Nvidia. It is viewed as the “bellwether” for the global AI expansion. The company supplies majority of the world's most advanced chips for data centers and smartphones, the report noted.

Chip shortages to continue?

TSMC's CEO CC Wei last month warned that the company would be unable to fulfill demand led by American customers for years, even as more manufacturing capacity comes online in the United States over the next few years.

He is not alone in the thought. Executives at South Korean major SK Hynix also feel that the current memory-chip shortages could continue well beyond 2030. This comes amid expansion spree by data center operators who have stoked demand for conventional memory and the high-bandwidth or HBM chips needed to work with AI systems.

The Bloomberg Intelligence analysts Charles Shum and Steven Tseng also feel that AI accelerator and server CPU demand keeps 3- and 5-nanometer capacity tight, making volume the driver of a potential beat. Gross margin might be at the top end of guidance on expectations of full leading-edge utilisation and pricing offsetting overseas fab dilution, they added.

Ballooning borrowing stokes bubble fears

Still, concerns from investors persist as the biggest data center operators, such as Alphabet Inc., and other AI players spend hundreds of billions of dollars each year on equipment. A significant proportion of their AI spending is now backed by ballooning borrowing, and there’s still no guaranteed path to lucrative returns from the outsized investment.

Hsinchu-based TSMC has said that it will set aside close to a record $56 billion for capital expenditures this year. The Taiwanese chipmaker is set to release full earnings and provide an update on its full-year outlook and spending on Thursday.

(With inputs from Bloomberg)

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