On Thursday, Taiwanese semiconductor giant TSMC (NYSE:TSM) expressed confidence in achieving over 20% revenue growth in 2024, fueled by surging demand for high-end chips utilized in artificial intelligence (AI) applications. This positive outlook comes amidst challenges faced by the broader industry, such as sluggish sales of smartphones and electric vehicles.
TSMC, the world’s largest contract chipmaker and a key supplier for tech giants like Apple Inc (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), outlined its strategic position as a key enabler for AI applications. CEO C.C. Wei, speaking at an earnings conference, emphasized TSMC’s integral role in the AI sector, stating, “So far today, everything you saw for AI comes from TSMC.” The company reported a fourth-quarter net profit that exceeded market expectations.
Demand for advanced packaging remains robust, with TSMC struggling to meet customer requirements, a trend expected to continue into the next year, according to Wei. However, he voiced concerns about potential overcapacity in the industry for mature nodes, acknowledging it as a valid worry. Despite this, TSMC remains confident due to strong customer demand for its specialty technologies.
Looking ahead, TSMC disclosed plans to expand its global manufacturing footprint, with construction set to commence at its fab plant in Germany in the fourth quarter of this year. The company is also considering technology node options for a second fab in Arizona. A new fab in Japan is scheduled to open next month with volume production starting in the fourth quarter. Additionally, TSMC is exploring the possibility of building a second factory in Japan. Capital spending for this year is forecasted to be in the range of $28-$32 billion, consistent with 2023, and the company aims to expand production in Taiwan as well.
TSMC revealed considerations for building a third fab in the southern Taiwanese city of Kaohsiung, focusing on advanced 2-nanometer chips driven by high demand in high-performance computing and smartphones.
Despite a 19% drop in net profit for the October-December quarter, TSMC remains optimistic about the future. Wendell Huang, TSMC’s chief financial officer, attributed the fourth-quarter performance to the strong adoption of the company’s industry-leading 3-nanometer technology. While acknowledging the seasonality impact on the current quarter due to the smartphone business, Huang highlighted the offsetting strength in the high-performance computing segment, inclusive of AI chips.
TSMC, which experienced a 32% surge in Taipei-listed shares last year, saw a 1.2% increase in stock value on Thursday ahead of the results, outpacing the 0.4% gain for the benchmark index (.TWII), resulting in a market value of $478.3 billion.
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