The rapid spread of artificial intelligence technologies is radically transforming the global semiconductor industry. The demand for high-performance chips that major technology companies need for their data centers, cloud infrastructures and artificial intelligence models has reached historic levels. At the center of this process is Taiwan Semiconductor Manufacturing Company (TSMC), the industry leader with its advanced production technologies. TSMC, which plays a key role in the production of many strategic products from Nvidia's graphics processing units to Apple's processors, is breaking records one after another with the momentum created by its artificial intelligence investments. The company's third quarter results, which are expected to be announced this week, will once again confirm that the upward trend continues.
DEMAND FOR ARTIFICIAL INTELLIGENCE IS DRIVING RECORD PROFIT
TSMC will report a 65 percent increase in third-quarter net profit to 746.3 billion Taiwan dollars (about US$23.4 billion) on Thursday, according to analysts. According to LSEG SmartEstimate data, the weighted estimates of 16 analysts are shaped in this direction. If the net profit exceeds 706.56 billion Taiwan dollars, the company will announce the highest quarterly profit in its history and carry its profit growth to the 11th quarter.
Third quarter revenue announced last week also exceeded market expectations and broke a new record with a 50 percent annual increase. Demand is particularly concentrated in artificial intelligence chip production capacity and advanced packaging technology called CoWoS. Morgan Stanley analyst Charlie Chan expects the company to raise its full-year revenue growth forecast from "over 40 percent" to the "low-mid 40 percent" band, driven by strong demand for 3 nanometer technology. TSMC's rise to the position of Asia's most valuable company and Samsung Electronics' market value almost doubling stand out as concrete reflections of this performance.
EXPANSION PLANS IN THE USA AND THE POSSIBILITY OF TEXAS
TSMC is carrying out a comprehensive $265 billion investment program in Arizona to strengthen its production capacity in the USA. This amount grew further with the additional $100 billion commitment announced in July. According to Reuters news in September, the company is also evaluating potential investment options in Texas. Tesla CEO Elon Musk's announcement of the artificial intelligence chip complex plan called "Terafab" last week and his statement that TSMC could take part here turned attention to Texas.
Analysts expect the company to respond to questions about possible expansion plans in Texas at its earnings conference call on Thursday. Morgan Stanley's Charlie Chan states that the space constraint in the Arizona facility may become evident within five years and that Texas may therefore come to the fore. Morningstar analyst Phelix Lee, on the other hand, reminds that the planned factories in Arizona have not been completed yet and states that Texas is not an immediate priority, but rather may be a long-term option for the 2030s and 2040s. According to Lee, Texas is in an advantageous position in terms of its semiconductor ecosystem and talent pool; It can also be considered as a strategic move against possible US trade policies.
INVESTMENT BUDGET HAS BEEN INCREASED, SHARES ARE STRONG
At its earnings conference call in July, TSMC raised its capital spending forecast this year to $60-64 billion from the upper end of the $52-56 billion band. This increase once again revealed how strong the need for artificial intelligence-based capacity is. TSMC shares traded on the Taipei stock exchange have gained 63 percent in value since the beginning of the year, following a strong trend in line with the general market performance.
Fourth-quarter expectations and updated annual guidance will also be announced on the company's earnings call at 0600 GMT. Analysts predict that TSMC will be able to continue its record series in the coming periods if artificial intelligence infrastructure investments continue.
