Taiwan Semiconductor Manufacturing Co reported second-quarter net income of NT$398.27 billion ($13.5 billion), a 61% jump from the same period last year, driven by persistent artificial intelligence chip demand that shows no signs of abating.
The world’s largest contract chipmaker posted revenue of NT$933.79 billion ($30.07 billion) for the quarter ended June 30, beating analyst expectations and marking the fifth consecutive quarter of double-digit earnings growth. Revenue climbed 39% year-over-year while advancing 11% sequentially.
Advanced technologies using 7-nanometer and smaller nodes accounted for 74% of total wafer revenue, with 3-nanometer chips representing 24% of the total, up from 22% in the prior quarter. The company’s high-performance computing segment, which includes AI accelerators, now comprises 60% of total revenue.
Despite the strong performance, profitability faces headwinds from TSMC’s aggressive overseas expansion. Chief Financial Officer Wendell Huang warned that international operations will reduce gross margins by 2-3 percentage points annually starting this year, increasing to 3-4 points as production scales up.
The company is accelerating construction of its Arizona facilities to meet surging customer demand. Construction of the second Arizona fab using 3-nanometer technology has been completed, with the production schedule being moved up by several quarters. The facility cluster is expected to handle 30% of TSMC’s most advanced chip production once fully operational.
TSMC projects third-quarter revenue between $31.8 billion and $33.0 billion, with gross margins expected to compress to 55.5%-57.5% from the current 58.6%, reflecting the costs of international expansion and competitive pressures in the semiconductor market.
