CEO C.C. Wei says TSMC is “making an attempt very exhausting to slim the hole” between provide and demand for AI chips
Taiwan chip large TSMC reported earnings that leaped greater than 61% year-over-year, pushed largely by the demand for chips to gas synthetic intelligence and high-performance computing (HPC).
Chairman and CEO C.C. Wei described making an attempt to maintain up with the huge demand for AI chips — and spoke of it by way of narrowing the hole between provide and demand, fairly than with the ability to totally meet demand.
“We try very exhausting to slim the hole for now,” Wei stated on TSMC’s name with traders.
TSMC’s quarterly revenues had been up almost 18% sequentially and up 44.4% year-over-year to greater than $30 billion, beating the corporate’s steerage for the second quarter. It raised its third-quarter steerage to between $31.8-$33.0 billion. That may be a 38% year-over-year improve on the midpoint.
TSMC is impacted by adverse forex pressures, nonetheless, and executives stated that also they are being conservative in regards to the potential impression of tariffs and commerce restrictions, significantly by way of potential impression on consumer-related chips and the lower-price finish of the market.
CFO Jen-Chau Huang stated on the decision that high-performance computing (HPC) chips accounted for 60% of the revenues through the second quarter, a rise of 14%. Smartphone chips had been up 7%, making up 27% of revenues, whereas IoT chips dropped by 14% to account for simply 5% of revenues. Automotive chips had been flat at 5% and TSMC’s Digital Client Electronics (DCE) chips accounted for 1% of revenues, which was a 30% improve.
TSMC’s superior processes — 7-nanometer or much less — accounted for 74% of its wafer revenues, with 3-nm processes accounting for twenty-four% of the wafer revenues. The corporate’s capital expenditures for the yr are anticipated to be between $38 billion and $42 billion.
“We consider the demand for semiconductors may be very basic and can proceed to be strong,” stated Wei. “Current developments are additionally constructive to AI’s long-term demand outlook. The explosive development in token quantity display growing AI mannequin utilization and adoption, which suggests an increasing number of computation is required, resulting in extra modern silicon demand. We additionally see AI demand persevering with to be robust, together with the rising demand from sovereign AI.”
Work continues on the TSMC Arizona ‘giga fab cluster’
TSMC has stated that it intends to take a position $165 billion in superior semiconductor manufacturing in the USA, with plans for six wafer manufacturing amenities in Arizona, plus two packaging fabs and a analysis and growth heart.
“Our growth plan will allow TSMC to scale as much as a giga fab cluster in Arizona to assist the wants of our modern prospects in smartphone, AI and HPC purposes,” Wei stated.
TSMC is a serious manufacturing companion for Nvidia. In a weblog publish in mid-April of this yr, Nvidia indicated that it had commissioned greater than one million sq. ft of producing area to construct and take a look at its Grace Blackwell chips in Arizona, plus testing AI supercomputers in Texas. Nvidia stated that it deliberate to provide “as much as half a trillion {dollars} of AI infrastructure in the USA by means of partnerships with TSMC, Foxconn, Wistron, Amkor and SPIL.”
TSMC’s first Arizon fab went into high-volume manufacturing within the fourth quarter of final yr, with a 4-nm course of. The second fab will supply 3-nm tech and is already full, Wei stated, and TSMC is engaged on “rushing up the amount manufacturing schedule by a number of quarters” with the intention to meet buyer demand. In the meantime, development on a 3rd fab for 2-nm tech is underway, and TSMC needs to speed up that manufacturing schedule as effectively, to satisfy AI chip demand. The fourth deliberate fab may also be a 2-nm facility, with the fifth and sixth anticipated to have much more superior manufacturing processes.
TSMC additionally has a brand new specialty fab in Japan and a second one within the works, plus an automotive-chip-focused facility deliberate in Dresden, Germany. In Taiwan, the corporate plans to construct greater than a dozen new amenities over the subsequent a number of years.
Along with producing the AI chips which might be anticipated to assist revolutionize the world, wxecutives had been additionally requested by analysts about how TSMC itself is utilizing AI. Huang responded that the corporate makes use of AI in operations and manufacturing in addition to in R&D. And for a corporation the dimensions of TSMC, Huang identified, a 1% achieve in productiveness would equal a couple of billion {dollars}.
