Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reported record-breaking consolidated revenue of NT$1.27 trillion ($39.5 billion) for the second quarter, marking a 36% year-on-year increase and a nearly 12% rise from the previous quarter. This surge was significantly boosted by a strong June performance, where revenue jumped 67.9% year-on-year and 6.2% month-over-month to NT$442.68 billion, setting a new monthly high. These figures exceeded TSMC's own guidance of $39.0 billion to $40.2 billion for the quarter.
The record sales are primarily attributed to robust global demand for artificial intelligence (AI) applications. For the first half of the year, TSMC's consolidated revenue increased by 35.6% from a year earlier, reaching NT$2.40 trillion. Analysts, such as Sravan Kundojjala of SemiAnalysis, note that TSMC is effectively sold out of its advanced N3 process, which is used in leading AI GPU and CPU designs, indicating persistently tight supply-demand dynamics in the AI sector.
Looking ahead, TSMC is expected to maintain its high capital expenditure. In April, the company forecast capital expenditure for the year to be at the higher end of its $52 billion to $56 billion range. Market estimates suggest cumulative capital expenditure could exceed $150 billion over the next three years, with a focus on 2-nanometer and more advanced technologies, as well as an expansion of its chip-on-wafer-on-substrate packaging technology crucial for AI chips. The company also plans to inject $20 billion into its Arizona subsidiary, bringing total cleared funding for its U.S. operations to $44 billion, which includes a 12-inch wafer fab and advanced packaging plant. Profitability and third-quarter guidance will be key points of interest during TSMC's upcoming earnings conference.
ASML, the sole producer of extreme ultraviolet (EUV) lithography machines vital for advanced chip manufacturing, will also report earnings. Its net bookings and order backlog are considered leading indicators for future fab capacity, as revenue reflects past orders, while bookings signify future commitments from foundries like TSMC. A strong bookings print indicates continued factory expansion for AI accelerators and high-bandwidth memory, while a soft print could signal a pause in customer investment. These earnings from both TSMC and ASML, reporting midweek, will set expectations for the entire chip industry, including AI chip designers like NVIDIA who rely on TSMC's fabrication capabilities.
