TSMC seen riding AI boom to fifth straight quarter of record profit

TAIPEI — TSMC, the world's largest manufacturer of advanced AI chips, will likely notch a fifth consecutive quarter of record earnings, driven by booming AI infrastructure spending.

Analysts say demand for Taiwan Semiconductor Manufacturing Co's (TSMC) three-nanometre and two-nanometre process technologies for AI chips, as well as for its advanced chip packaging technology, CoWoS, remains strong.

That has catapulted Asia's most valuable company, a key supplier to Nvidia and Apple, to new heights. Its market capitalisation is now nearly double that of South Korean rival Samsung Electronics at around US$1.97 trillion (S$2.5 trillion).

On Thursday (July 16), TSMC is expected to report a 59 per cent surge in net profit to T$632.6 billion (S$25.4 billion) for the second quarter, according to an LSEG SmartEstimate compiled from 18 analysts. 

SmartEstimates place greater weight on forecasts from analysts who are more consistently accurate.

An earnings call at which it will provide third-quarter and updated full-year guidance is scheduled for 6am GMT (2pm SGT).

Any result above T$572.5 billion would mark the company's highest-ever quarterly net income, and its 10th consecutive quarter of profit growth.

On Monday, it posted a 36 per cent year-on-year rise in second-quarter revenue, ahead of market forecasts and a new record high.

"TSMC's strong second-quarter revenue shows AI demand remains healthy, driving demand for its advanced chip production and CoWoS packaging," said Dan Nystedt, research analyst at TriOrient, an Asia-based private investment firm.

Analysts broadly expect TSMC to raise its full-year revenue growth outlook.

Haas Liu, Bank of America's Asia semiconductor analyst, said in a research note that supply chain checks suggest the AI demand pipeline remains strong, and that TSMC could raise the full-year outlook from its current guidance of "above 30 per cent" year-on-year.

Another key focus for investors will be whether TSMC raises its capital spending outlook, viewed as an important gauge of management's confidence in the durability of AI demand.

On its last earnings call in April, the company said 2026 capital expenditure would be at the high end of its earlier guidance of $52 billion to $56 billion.

While some analysts, including Nystedt, expect TSMC to retain that guidance, Liu forecasts the company could raise capital spending to about US$58 billion, citing tight equipment supply and aggressive capacity expansion by memory makers including Samsung Electronics, Micron Technology and SK Hynix.

TSMC is investing US$165 billion to build chip factories in the US state of Arizona.

TSMC's Taipei-listed shares have gained 56 per cent so far this year, slightly higher than the 54 per cent rise for the broader market.

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