September 12, 2024 /SemiMedia/ — Taiwan Semiconductor Manufacturing Company (TSMC) reported a 33% year-over-year increase in August revenue, reaching NT$250.9 billion (approximately $7.8 billion). This surge highlights the robust demand for AI chips and a recovering smartphone market, providing a positive signal for investors. Although the growth rate was below July's 45%, analysts expect TSMC's third-quarter revenue to rise by 37%, continuing the post-pandemic recovery seen in 2023.

More than half of TSMC's revenue comes from high-performance computing (HPC), driven significantly by AI demand. As the preferred chipmaker for NVIDIA, TSMC has benefitted greatly from AI-related orders. While NVIDIA's early September earnings report fell short of peak expectations, causing a record $279 billion drop in its market value, TSMC's performance has helped alleviate concerns about the sustainability of AI infrastructure investments.

TSMC is also the primary manufacturer of Apple's iPhone processors. Apple's recently launched iPhone 16 series is "built from the ground up" for AI, though some AI features will be introduced through subsequent software updates. Analysts anticipate that the adoption of Wi-Fi 7 in the iPhone 16 and iPhone 16 Pro will accelerate market penetration and drive demand for TSMC's advanced nodes, including 7nm and 5nm processes used by companies like Broadcom and MediaTek. Additionally, the performance gains of Apple's A18 and A18 Pro processors align with expectations, further boosting optimism for sales growth of TSMC's N3E node (second-generation 3nm).

Amid a broader market recovery, TSMC is undertaking extensive global expansion efforts. The company has made initial progress on its project in Arizona, USA, is considering establishing a third fab in Japan, and recently broke ground on a €10 billion fab in Germany. These strategic moves underscore TSMC's ambition to cement its leadership in the global semiconductor industry.