TSMC profit tops estimates as advanced chips drive another record quarter

Taiwan Semiconductor Manufacturing Co. posted stronger-than-expected second-quarter results Thursday, giving investors another read on the scale of demand behind artificial intelligence and other high-end computing chips. The company’s profit rose 23.4% from a year earlier, while revenue also came in above analyst expectations.

TSMC, the world’s largest contract chipmaker, makes semiconductors designed by other companies rather than selling its own branded chips. That makes its earnings a closely watched signal for the broader tech supply chain, especially for companies tied to advanced processors.

For the three months ended in June, TSMC reported revenue of 1.27 trillion new Taiwan dollars, or $39.45 billion. That was ahead of the NT$1.264 trillion expected under LSEG SmartEstimates, which give more weight to analysts with stronger forecasting records.

Net income reached NT$706.56 billion, also beating the NT$632.64 billion expected by LSEG SmartEstimates. TSMC said quarterly profit hit a record for the fifth straight quarter.

Revenue increased 36% from NT$933.79 billion in the same quarter a year earlier. The company said advanced technologies, defined as 7-nanometer chips and smaller, made up 77% of total wafer revenue.

A nanometer is a measurement used in chip manufacturing. Smaller numbers generally refer to more advanced production processes that can fit more computing power into a chip while improving efficiency. Wafer revenue refers to sales from the circular silicon discs on which chips are produced before being cut and packaged.

Why high-end chips are driving the numbers

TSMC’s results reflect demand from global technology companies that rely on advanced semiconductors for AI systems, consumer devices and other computing workloads. The company manufactures chips for major customers including Nvidia, Apple and Broadcom.

AI chip demand has been a central driver for TSMC because the most advanced processors require cutting-edge manufacturing. As more spending flows into AI infrastructure, chip designers need foundry partners that can produce those chips at scale.

The second-quarter report followed TSMC’s June sales update earlier in the week, which also showed growth. The latest earnings extend a run of record-setting quarters for Asia’s most valuable company.

TSMC shares rose 1.23% Thursday. The stock has gained more than 58% so far this year, according to the market data cited in the report.

For retail investors, the read-through is broader than one company’s earnings beat. TSMC sits near the center of the semiconductor supply chain, so its revenue mix can help show where chip demand is strongest. In this quarter, the company’s numbers pointed clearly to advanced chip production as the main engine of growth.

This story draws on original reporting from CNBC.