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TSMC's Q2 Sales Driven by AI Demand Surge
Taiwan Semiconductor Manufacturing Co. (TSMC) reported impressive growth in its second-quarter sales, propelled by the booming artificial intelligence (AI) sector that is spurring global investment in data centers. TSMC, the exclusive supplier for advanced chips used by tech giants like Nvidia Corp. and Apple Inc., revealed that its revenue for June reached NT$207.9 billion, culminating in a 40% increase for the quarter to NT$673.5 billion—exceeding projections of a 35.5% rise.
AI Investments and Market Valuation
The announcement came shortly after TSMC temporarily hit a $1 trillion market capitalization, driven by substantial investments into AI infrastructures and devices. This surge in demand for Nvidia chips, crucial for building AI-supporting hardware, has led to Wall Street brokerages revising their price targets for TSMC upwards. There’s also speculation that the chipmaker might raise prices for its customers by 2025 to further boost earnings.
Balancing Smartphone and AI Chip Sales
While the influx of AI chip orders has significantly contributed to TSMC's revenue, it also compensates for the sluggish performance in the smartphone market, which is just beginning to bounce back. Apple continues to be TSMC's largest customer, pivotal for the company's revenue streams.
Market Impact and Investor Sentiment
Optimism around TSMC and other AI-related stocks has positively affected the benchmark Taiex Index, lifting it by over 40% in the past year. This rise has been achieved despite ongoing US-China geopolitical tensions hovering over Taiwan. Nevertheless, market valuation concerns are surfacing, particularly around Nvidia. A New Street Research analyst recently downgraded Nvidia’s stock, suggesting it was “getting fully valued.”
Conclusion
In summary, TSMC's robust second-quarter performance underscores the escalating demand for AI-enabling technologies, positioning the company favorably in the evolving semiconductor landscape. While valuation hiccups and market dynamics introduce a degree of caution, TSMC continues to capitalize on the global AI investment wave, striking a balance between its AI and smartphone chip markets.
