TSMC (Taiwan Semiconductor Manufacturing Company) has explained how it achieved 36 percent rise in third-quarter revenue to $23.5 billion.
The Taiwan chipmaker said it expected fourth-quarter revenue of $26.1 billion-$26.9 billion, up from $19.62 billion in the same period of 2023.
TSMC has increased its revenue in the recent quarters through strategic actions driven by surging demand for advanced chips, especially in AI and smartphones:
Research analysts at Canalys says global smartphone shipments grew 5 percent in Q3 2024, marking a fourth consecutive quarter of growth.
Analysts at Gartner say that AI chips market is expected to achieve growth of 33 percent in 2024 to $71 billion.
AI Boom: TSMC benefited significantly from the growing demand for AI-related chips. AI processors now account for a mid-teens percentage of its overall revenue. Key clients like Apple and Nvidia leverage TSMC’s advanced chips for AI applications, fueling demand across industries. Apple has 18 percent share in the global smartphone market in Q3 2024.
Advanced Technologies: TSMC’s dominance in advanced semiconductor manufacturing, including its 3nm and 5nm process technologies, has been a critical driver of growth. These technologies are in high demand for advanced smartphones and AI applications.
TSMC said shipments of 3-nanometer accounted for 20 percent of total wafer revenue; 5-nanometer accounted for 32 percent; 7-nanometer accounted for 17 percent. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 69 percent of total wafer revenue.
Capital Expenditure: TSMC increased its capital expenditure to expand production capacity. TSMC’s capital spending is set to exceed $30 billion in 2024, with further increases anticipated in 2025. This investment supports its growth and positions it to meet future demand. Capital expenditure in the third quarter was $6.4 billion, TSMC said, compared with $6.36 billion in the second quarter.
Overseas Expansion: TSMC is building new fabs (fabrication plants) abroad, particularly in the U.S. (Arizona), with production expected to begin in 2025. These overseas plants will help TSMC meet global demand and enhance its presence in key markets.
Record Profits: In Q3 2024, TSMC reported record-breaking profits of $10.11 billion, a 54 percent increase compared to the previous year, thanks to rising revenues from AI and smartphone markets.
Overall, TSMC’s leadership in advanced chip manufacturing, large capital investments, and strategic expansions have led to a significant revenue boost, particularly driven by the AI boom.
Baburajan Kizhakedath
