Taiwan Semiconductor Manufacturing Co. experienced an impressive surge in second-quarter sales, the fastest growth seen since 2022, largely due to the thriving AI sector driving global data center investments. As the sole supplier of advanced chips to tech giants like Nvidia Corp. and Apple Inc., the company reported revenue of NT$207.9 billion ($6.4 billion) in June. With a 40% increase in sales for the June quarter totaling NT$673.5 billion, TSMC outperformed expectations of a 35.5% rise.
This surge in sales comes as TSMC reaches a milestone market capitalization of $1 trillion, driven by significant investments in artificial intelligence-related hardware. Despite challenges in smartphone sales, the company has benefitted from increased demand for AI chips, with Apple representing its largest customer. The positive performance of TSMC and other AI-related stocks in Taiwan has also contributed to the Taiex Index rising over 40% in the past year, despite concerns surrounding US-China geopolitical tensions.
Analysts predict that TSMC’s strong sales performance in the second quarter will help offset margin dilution from the 3nm ramp-up and lead to an earnings beat. There is also speculation on TSMC’s potential to negotiate price increases in the future, given the strong demand for its chips. However, concerns about valuation are dampening optimism around AI powerhouse Nvidia, with some analysts downgrading the stock due to it being “fully valued.” Despite this, Nvidia shares have seen a significant increase this year, reflecting the ongoing momentum in the AI sector.
