17 October 2024
If you are covering TSMC’s latest financial results, please find below a comment from Ben Barringer, technology analyst at Quilter Cheviot:
“While ASML delivered a negative update earlier this year, TSMC continues to go from strength to strength thanks to the artificial intelligence boom. Revenues were up 36% in the quarter, with very strong demand coming from AI, as well as smartphones which has been weaker of late. This is encouraging and has resulted in TSMC raising its guidance, giving the sector confidence again after ASML’s news.
“TSMC is not immune to some of the volatility in the sector as capital expenditure will actually be lower than expected in 2024, but into next year it will grow again as the company seeks to capitalise on the structural tailwinds that are present. In fact, to provide an idea of just how important AI is becoming to these companies, and how big the opportunity set is, TSMC expects revenues from it to grow from 5% in 2023 to 15% in 2024. This is only going to get even bigger into next year.
“TSMC is not just an AI machine though. Other areas if the business are stable and they are much better positioned than both Intel and Samsung, which have had their own well documented issues. TSMC has positioned itself well and should any real downturn hit the sector, it should be in a strong position to weather this and emerge in a good place.”
