By Sherry Qin


Taiwan Semiconductor Manufacturing Co. raised its sales outlook after better-than-expected quarterly profit, as demand for its advanced chips continued to surge amid enthusiasm over artificial intelligence.

The world's largest contract chip maker said Thursday that its second-quarter net profit rose 36% from a year earlier to 247.85 billion New Taiwan dollars (US$7.61 billion). That exceeded the NT$235.12 billion estimate of analysts polled by FactSet.

Revenue for the quarter rose 40% to NT$673.51 billion after its June revenue climbed 33%.

TSMC said sales from its high-performance computing segment, which includes AI chips, jumped about 28% from the previous quarter, while sales from smartphones fell 1% and those from its Internet-of-Things segment rose 6%.

The company guided for third-quarter revenue of US$22.4 billion to US$23.2 billion, signaling its confidence in a continuing AI boom.

"The demand is so high, I had to work very hard to meet customer demand," TSMC Chairman and Chief Executive C.C. Wei said on the earnings call, adding that the company hopes to strike a supply-and-demand balance in 2025 or 2026.

Projecting a strong 2024, TSMC also raised its full-year revenue growth guidance to slightly above mid-20% in U.S. dollar terms from a low- to mid-20% range previously.

The Taiwanese company, which counts Nvidia and Apple as clients, produces roughly 90% of the world's most advanced chips.

Investors have pushed shares of the chip maker to all-time highs, driven by bets the AI frenzy is set to continue. Its Taiwan-listed shares have risen nearly 70% this year, outperforming the benchmark Taiex's 30% gain. Last week, its American depositary receipts rose to a record, briefly pushing the company's market value past US$1 trillion.

However, geopolitical concerns remain an overhang for TSMC and the broader semiconductor industry.

TSMC's stocks came under pressure ahead of the earnings report and overnight on Wall Street following remarks by U.S. presidential candidate Donald Trump. He took aim at Taiwan's chip-production dominance, saying the island should pay the U.S. for defense in an interview with Bloomberg Businessweek.

The simmering threat of a Chinese invasion and the emergence of chip manufacturing as a geopolitical priority have pushed the company to become more geographically spread out.

TSMC is spending billions on building new factories overseas, including three plants in Arizona for more than US$65 billion.

A report that the Biden administration is considering new restrictions on chip companies doing business in China helped fuel pessimism.

Shares of the company dropped another 2.4% in Taiwan trading Thursday as semiconductor stocks broadly fell. Its ADRs in New York slumped 8.0%, their biggest one-day percentage drop in more than four years, amid a selloff in U.S. technology stocks.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

07-18-24 0634ET