In its recently released financial results for the second quarter of 2024, Taiwan Semiconductor Manufacturing Co. (TSMC) posted impressive figures that reflect both its dominant market position and the growing demand for the advanced chip technologies it offers.
TSMC is currently the world's ninth most valuable company with a market capitalization of $836.35 billion, but it recently briefly surpassed $1 trillion, dropping it to eighth place.
The manufacturing giant reported net sales of NT$673.51 billion (US$20.88 billion), marking a 40.1% increase from NT$480.84 billion (US$14.91 billion) a year earlier. Gross profit also saw a substantial rise, reaching NT$358.13 billion (US$11.10 billion), up 37.6% from a year earlier when it reached NT$260.20 billion (US$8.07 billion).
Operating income followed a similar upward trend, rising 41.9% to NT$286.56 billion (US$8.88 billion) compared with NT$201.96 billion (US$6.26 billion) in the same quarter last year. Net income demonstrated solid growth, increasing 36.3% to NT$247.85 billion (US$7.68 billion) from NT$181.8 billion (US$5.64 billion).
Rising prices
Despite good profits, a price increase seems imminent.
During a call with Wall Street analysts, Dr. CC Wei, President and CEO of TSMC, said, “Today we are investing heavily in cutting-edge advanced and specialized packaging technologies to support our customers’ growth and enable their success. If customers do well, TSMC will do well as well. For example, we are pleased to see that the structural profitability of many of our customers has improved over the past few years. At the same time, we face rising cost challenges due to increasing process complexity, a leading load, higher electricity costs in Taiwan, global fiber expansion in higher cost regions, and other cost inflation challenges. Therefore, we will continue to work closely with our customers to share our value. We will also work diligently with our suppliers to deliver on cost performance.”
TSMC earnings report, The Next PlatformTimothy Prickett Morgan mused: “Maybe TSMC should buy Arm, build a cloud, and just cut out all the middlemen,” before adding: “You know, sometimes we say things just to see how they sound, mostly for fun…” While there’s no suggestion that this would happen, it wouldn’t be the craziest idea – TSMC certainly has the potential to take on a role beyond the confines of foundry services provider if it so chooses.
For the third quarter of 2024, based on an exchange rate of US$1 to NT$32.5, TSMC anticipates revenue of US$22.4 billion to US$23.2 billion, with expected gross profit margins ranging from 53.5% to 55.5% and operating profit margins ranging from 42.5% to 44.5%. Earnings will decline slightly because TSMC is investing in its 2-nanometer N2 and 16-angstrom A16 processes for use in future products.
