Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, anticipates a robust growth trajectory in 2024, projecting more than a 20% increase in revenue. The optimistic outlook is attributed to the surging demand for high-end chips in artificial intelligence (AI) applications despite challenges in the broader industry, including subdued sales in smartphones and electric vehicles.
TSMC, a key supplier for major tech giants like Apple Inc. and Nvidia, expressed its pivotal role in enabling AI applications during an earnings conference. CEO C.C. Wei highlighted the company’s significance in the AI landscape, stating, “So far today, everything you saw for AI comes from TSMC.” The chipmaker reported a fourth-quarter net profit that surpassed market expectations.
The demand for advanced packaging witnessed considerable strength, with TSMC struggling to meet the capacity requirements of its customers. Wei emphasized that this high demand is expected to persist into the next year. However, he also expressed concerns about potential over-capacity in the industry, particularly for mature nodes, noting that excess capacity is a valid worry.
Despite these industry-wide concerns, Wei clarified that TSMC is well-positioned due to strong customer demand for its specialty technologies, alleviating over-capacity concerns for the company.
Looking ahead, TSMC outlined plans to expand its global manufacturing footprint. Construction for its fab plant in Germany will commence in the fourth quarter of 2024. Additionally, the company is deliberating on the technology node for a second fab in Arizona. A new fab in Japan is set to open next month, with volume production expected in the fourth quarter.
TSMC’s capital spending for the year is forecasted to be $28 billion to $32 billion, aligning with the figures from 2023. The company also envisions expanding production domestically in Taiwan. There are considerations for building a third fab in Kaohsiung, Taiwan, dedicated to advanced 2-nanometer chips driven by robust demand in high-performance computing and smartphones.
Despite a 19% drop in net profit for the October-December quarter, TSMC remains optimistic about the future. The company expects solid growth in 2024, with revenue increasing in the low to mid-20% range in U.S. dollar terms. TSMC’s shares surged 32% in the previous year, reflecting its resilience and market dominance, with a current market value of $478.3 billion.
