Preview: TSMC third-quarter profit seen jumping 40% on strong AI chip demand

MEDIATEK

14/10/2024 01:01

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      Analysts expect third-quarter profit of $9.27 bln
    

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      Q3 revenue jumps, beats market expectations
    

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      Stock price has leapt on chip demand for AI applications
    

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      Earnings call at 0600 GMT on Thursday
    

  
    By Ben Blanchard and Faith Hung
       TAIPEI, Oct 14 (Reuters) - Taiwan Semiconductor
Manufacturing Co  2330.TW , the main producer of advanced chips
used in artificial intelligence applications, is expected to
report a 40% leap in third-quarter profit on Thursday thanks to
soaring demand.
    The world's largest contract chipmaker, whose customers
include Apple  AAPL.O  and Nvidia  NVDA.O , has benefited from
the surge towards AI. 
    TSMC  TSM.N  is set to report a net profit of T$298.2
billion ($9.27 billion) for the quarter ended Sept. 30,
according to a LSEG SmartEstimate drawn from 22 analysts.
SmartEstimates give greater weighting to forecasts from analysts
who are more consistently accurate.
    That estimate compares to the 2023 third-quarter net profit
of T$211 billion.
    TSMC last week reported a jump in third-quarter revenue as
reported in Taiwan dollars, comfortably beating market
expectations. The company gives its revenue outlook in U.S.
dollars at its earnings conference.
    "Most of TSMC's major clients, including Apple, Nvidia, AMD
 AMD.O , Qualcomm  QCOM.O  and Mediatek  2454.TW  are launching
new products which heavily rely on TSMC's advanced process
technologies," said Li Fang-kuo, chairman of President Capital
Management.
    "TSMC's Q3 earnings will exceed expectations by a lot," Li
added.
    TSMC, at its quarterly earnings call at 0600 GMT on
Thursday, will update its outlook for the current quarter as
well as for the full year, including its capital expenditure as
it races to expand production.
    TSMC is spending billions building new factories overseas,
including $65 billion on three plants in the U.S. state of
Arizona, though it says most manufacturing will remain in
Taiwan.
    On its last earnings call in July, TSMC raised its full-year
revenue forecast and adjusted its capital expenditure plans for
this year to between $30 billion and $32 billion, compared with
a previous forecast of $28 billion to $32 billion.
    The AI boom has helped drive up the price of shares in
Asia's most valuable company, with TSMC's Taipei-listed stock
soaring 77% so far this year, compared with a 28% gain for the
broader market  .TWII .
    Hsinchu-headquartered TSMC, colloquially referred to the
"sacred mountain protecting the country" for its crucial role in
Taiwan's export-oriented economy, faces little competition.
    Once the dominant force in the semiconductor industry,
five-decade-old Intel  INTC.O  is facing one of its worst
periods as losses mount at the contract manufacturing unit it is
building out in hopes of challenging TSMC.

($1 = 32.1570 Taiwan dollars)

 (Reporting by Ben Blanchard and Faith Hung; Editing by
Christopher Cushing)
 ((ben.blanchard@thomsonreuters.com;))