TSMC Q2 profit jumps 77% on booming AI chip demand

Taiwan Semiconductor Manufacturing Company (TSMC) said Thursday its second-quarter net profit surged more than 77% from a year earlier as strong demand for artificial intelligence chips drove record earnings.

The world's largest contract chipmaker reported net income of 706.56 billion New Taiwan dollars ($21.95 billion) for the April-June quarter, up 77.4% from a year earlier and 23.4% from the previous quarter.

Revenue rose 36% year over year to $39.4 billion, with both revenue and profit exceeding market expectations.

Chief Executive Officer C.C. Wei said demand related to AI remained "extremely robust" and announced an additional $100 billion investment in Arizona to meet strong multiyear demand from major US customers.

The new commitment raises TSMC's planned investment in Arizona to $265 billion and will support the construction of additional logic chip plants using 2-nanometer and more advanced technologies, along with advanced packaging facilities.

TSMC manufactures chips for major technology companies including Nvidia, Apple and Broadcom and has benefited from rapidly growing investment in AI infrastructure.

Advanced process technologies of 7 nanometers and below accounted for 77% of total wafer revenue during the quarter.

Five-nanometer technology contributed 33% of wafer revenue, followed by 3-nanometer chips at 30%, 7-nanometer technology at 11% and the newly introduced 2-nanometer process at 3%.

High-performance computing, including chips used in AI applications and data centers, generated 66% of total revenue, while smartphones accounted for 22% and internet-connected devices for 5%.

"Our business in the second quarter was supported by strong demand for our leading-edge process technologies," Chief Financial Officer Wendell Huang said.

The company forecast third-quarter revenue of $44.6 billion to $45.8 billion, with a gross margin of 65% to 67% and an operating margin of 56% to 58%, citing continued strong demand and the expansion of its 2-nanometer technology.