TSMC profit rises 23% as advanced chips drive record quarter

Taiwan Semiconductor Manufacturing Co. reported a 23.4% rise in second-quarter profit on Thursday, with earnings and revenue both ahead of analyst expectations tracked by LSEG. The result underscored continuing demand for high-end semiconductors used by major technology groups and lifted TSMC shares 1.23% in Thursday trading.

The world’s largest contract chipmaker posted net income of NT$706.56 billion for the three months ended in June. LSEG SmartEstimates, which give greater weight to forecasts from analysts with stronger recent accuracy, had pointed to NT$632.64 billion.

Revenue reached NT$1.27 trillion, or about $39.45 billion, compared with LSEG’s estimate of NT$1.264 trillion. Sales were up 36% from NT$933.79 billion in the same period a year earlier, according to the company’s reported figures.

Advanced nodes dominate wafer revenue

TSMC said technologies of 7 nanometers and below accounted for 77% of total wafer revenue in the quarter. In chip manufacturing, a smaller nanometer classification generally refers to more advanced production processes that can support higher performance and efficiency, attributes sought for artificial intelligence and other demanding computing workloads.

As a contract chipmaker, TSMC manufactures semiconductors designed by customers rather than selling most chips under its own brand. Its client base includes Nvidia, Apple and Broadcom, companies tied to large global markets for artificial intelligence infrastructure, consumer devices and networking components.

The June quarter marked the fifth consecutive quarter in which TSMC’s net income reached a record high, according to the company’s results. The figures followed strong June sales released earlier in the week, capping a quarter in which demand for high-end chips remained a central driver of the company’s growth.

Market value reflects AI-linked demand

TSMC is Asia’s most valuable company by market capitalization. Its shares have gained more than 58% so far this year, according to market data cited alongside the company’s results.

The company’s position in the semiconductor supply chain gives its earnings broad relevance for investors and policymakers. TSMC produces chips used across consumer electronics, data centers and advanced computing systems, making its revenue mix a closely watched indicator of demand from global technology companies.

The latest results showed that advanced manufacturing processes continued to account for the bulk of wafer revenue. That concentration links TSMC’s performance to spending by customers requiring leading-edge chips, including those used in artificial intelligence applications.

The company did not use the reported results to provide figures beyond the quarter in the information available. The confirmed data show revenue and profit ahead of consensus estimates, record quarterly net income for a fifth straight period, and a continued shift toward the most advanced production technologies in TSMC’s wafer business.

This story draws on original reporting from CNBC.