TSMC Sales Surge 36% in Fresh Sign of AI Spending Momentum

Taiwan Semiconductor Manufacturing Co. reported quarterly sales rose 36%, meeting high expectations and signaling global demand for AI hardware remains intact.

Revenue for the three months ended June totaled NT$1.27 trillion ($39.6 billion) according to a Bloomberg calculation, matching the average of analyst estimates. The figures were bolstered by very strong performance in June, when TSMC’s sales rose by 68% compared to the same month a year earlier.

The main chipmaker for Nvidia Corp. and Apple Inc. is regarded as a gauge of the global AI infrastructure buildout, given its central role in producing the vast majority of the world’s most advanced chips for data centers and smartphones.

Chief Executive Officer C.C. Wei warned in June that his company won’t be able to fulfill demand led by American customers for years, even as more manufacturing capacity comes online in the US over the next few years.

That sentiment has been echoed by major chipmakers. SK Hynix Inc. now sees the ongoing memory-chip shortages persisting beyond 2030, as a spending spree by data center operators has stoked the appetite for both conventional memory and the high-bandwidth or HBM chips that work with AI systems.

What Bloomberg Intelligence SaysAI accelerator and server CPU demand keeps 3- and 5-nanometer capacity tight, making volume the driver of a potential beat. Gross margin might be at the top end of guidance on expectations of full leading-edge utilization and pricing offsetting overseas fab dilution.- Charles Shum and Steven Tseng, BI analystsClick here for the research.

Still, concerns from investors persist as the biggest data center operators, such as Alphabet Inc., and other AI players spend hundreds of billions of dollars each year on equipment. A significant proportion of their AI spending is now backed by ballooning borrowing, and there’s still no guaranteed path to lucrative returns from the outsized investment.

Hsinchu-based TSMC has said that it will set aside close to a record $56 billion for capital expenditures this year. The Taiwanese chipmaker is set to release full earnings and provide an update on its full-year outlook and spending on Thursday.