Taiwan Semiconductor Manufacturing (TSMC) has reported better-than-anticipated revenues for its third quarter (Q3) of 2024, benefiting from the continued strong demand for artificial intelligence (AI) chips.
The contract chipmaker’s revenue for the July-September period reached $23.5bn, surpassing the market estimate of $23.3bn, reported Reuters. This performance marks a 36.5% on-year growth compared with $17.3bn in the prior-year period.
For September alone, TSMC reported a 39.6% year-on-year jump in revenue, reaching $7.81bn.
On its July earnings call, the chipmaker forecasted third-quarter revenue to be between $22.4bn and $23.2bn meaning the actual results outperformed the company’s own projections. The surge is attributed to TSMC’s role in the production of advanced chips used in AI infrastructure, particularly for the company’s major clients, including Apple and Nvidia.
TSMC’s revenue for January through September 2024 totalled $62.81bn, an increase of 31.9% compared to the corresponding period in 2023.
TSMC’s strong showing comes despite a broader slowdown in chip demand following the pandemic-driven surge. AI-related orders have more than doubled TSMC’s sales since 2020.
The company expects to release its full third-quarter earnings on 17 October, alongside updated guidance for the rest of the year.
TSMC’s stock has seen significant growth this year, rising 72% compared to a 26% gain in Taiwan’s broader market. This follows an exceptional 2024 performance, during which TSMC consistently beat market expectations, driven by the demand for high-performance computing chips.
In July, TSMC briefly crossed the $1 trillion market capitalisation mark. The same month, the company raised its outlook for the year following stronger-than-expected second-quarter results.
The company reported a 33% rise in June revenue, and August revenue also rose by 33%, indicating sustained demand from sectors such as smartphones and AI hardware.
TSMC domination of the AI chip market
While TSMC continues to dominate the AI chip market, its competitors, including Intel and Samsung, have struggled to match its capabilities in the bespoke chipmaking business. This week, Samsung published an open letter, apologising for its Q3 earnings falling below market expectations.
TSMC’s market leadership is expected to support its margins moving forward. Earlier this year, the company won $6.6bn in funding from the US Commerce Department as part of its efforts to increase US chip production.
The subsidy, granted through the CHIPS and Science Act, supports advanced semiconductor production in Phoenix, Arizona. TSMC was also offered up to $5bn in low-cost government loans.
Read more: Samsung apologises for weak Q3 2024 earnings amidst AI chip boom
