Credit：Nvidia
TSMC reported last Thursday its revenue for the quarter ended September 30 gained 39% year-over-year (YoY) to 759.69 billion New Taiwan dollars (NT$759.69 billion), or US$23.5 billion with a 36% YoY rise, topping the company's previous forecast of US$22.4 billion to US$23.2 billion. The net income for the third quarter surged 54.2% YoY to a quarterly record of NT$325.26 billion, better than analysts’ estimated NT$300.2 billion.
“Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” said Wendell Huang, Senior VP and Chief Financial Officer of TSMC. “Moving into fourth quarter 2024, we expect our business to continue to be supported by strong demand for our leading-edge process technologies.”
TSMC delivered more optimistic outlook following the financial results. It now expects revenue for the year 2024 to grow close to 30% in U.S. dollar terms, upgrading from its previous guidance of slightly above the mid-20% range. It said revenue from AI processors is set to account for mid-teens percentage of its overall revenue this year.
"The demand is real," Chairman and CEO C.C. Wei told an earnings call, referring to AI and adding it would last for many years. As a result, TSMC has has experienced the “deepest and widest growth of anyone in this industry,” Wei said. “We have talked to our customers all the time, including our hyperscaler customers who are building their own chips. And almost every AI innovator is working with TSMC,” said Wei.
TSMC’s earnings and outlook on AI allayed the concern raised by the world’s leading lithography machine manufacturer. ASML Holding NV last Tuesday announced weaker-than-expected bookings and guidance, along with the downward sales outlook in its major market China. Its net bookings slumped 53% quarter-over-quarter (QoQ) to 2.63 billion euros, less than half of the value forecast of 5.39 billion euros by Wall Street analysts. ASML now expects the net sales for the year 2025 to come in between 30 billion euros and 35 billion euros, representing the lower half of the range of 30 billion euros and 40 billion euros it previously provided. Analysts anticipated the annual net sales would be 35.94 billion euros.
ASML management warned the recovery of the semiconductor industry will be slower than expected after released of the quarterly results. “With regards to market condition, while we continue to view AI as a key driver of the industry recovery with potential upside, we see other segments recovering more slowly than anticipated. The recovery will extend well into 2025, which is leading to customer cautiousness and some push outs in their investment,” ASML President and CEO Christophe Fouquet said in an earnings call with analysts last Wednesday.
The Wall Street stayed upbeat on Nvidia following TSMC earnings beat. Bank of America (BofA) analysts, led by Vivek Arya, lifted their price target for Nvidia to $190 from $165 last Thursday, implying it could rise 38% from Friday’s close. The analysts reiterated their buy rating on Nvidia, calling it a “top AI pick” and a "generational opportunity," estimating a total addressable market of more than $400 billion for AI accelerators.
The BofA analysts pointed to recent comments from Nvidia CEO Jensen Huang, who said that demand for the company's Blackwell AI chips is “insane” in an interview with CNBC earlier this month. "AI models (demand) continue to evolve, with the cadence of new LLM model launches now increased to 3-5 times/yr per developer (OpenAI, Google, meta, etc.), and each new major generation requiring 10-20x compute requirement to train," analysts said.
In addition, Nvidia’s large client Microsoft Corporation is said to have soared its fourth-quarter NVIDIA GB200 orders by 3 times from 400 racks to 1,450 racks, according to a note from TF International Securities analyst Ming-Chi Kuo last Friday.
Nvidia’s Blackwell chip production ramp-up begins in the early fourth quarter of this year, and considering yield rates and testing efficiency, estimated shipments are about 150,000-200,000 units in the fourth quarter, with significant growth projected at 200-250% QoQ to 500,000-550,000 units in the first quarter of 2025, Kuo wrote.
