TSMC posts record quarterly profit on AI demand, but cautious on tariff impact
Saying demand for AI was getting stronger and stronger, TSMC predicted another leap in sales for the third quarter and hiked its revenue outlook for the full year.
It also noted that key client Nvidia had recently been allowed by the US government to resume sales to China of its H20 AI chip.
'China is a big market, and my customer can continue to supply the chip to the big market, and it's very positive news for them and in return it's very positive news for TSMC,' chief executive CC Wei told a press conference.
But momentum for Q4 earnings could be different. 'We are taking into consideration the possible impact of tariffs and a lot of other uncertainties, so we are becoming more conservative,' Wei noted, though he added that TSMC had yet to see any changes in customer behaviour so far.
In the April-June quarter, net profit hit a historic high of NT$398.3 billion (S$17.4 billion), up 60.7 per cent year-on-year and marking its fifth straight quarter of double-digit growth. That was well ahead of a NT$377.9 billion LSEG SmartEstimate.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
For the current quarter, it predicted a leap in revenue of up to 40 per cent and for the full year, it now estimates revenue growth of around 30 per cent in US dollar terms, up from a previous forecast of 'close to the mid-20s'.
But while sales are roaring, TSMC said the New Taiwan dollar's appreciation against the US dollar – around 12 per cent so far this year – would dent margins.
Its Q3 gross margin is expected to fall to between 55.5 per cent and 57.5 per cent, down from 58.6 per cent in the second quarter, also hurt by TSMC's ramp-up of investment in new US and Japanese factories.
However, the company stuck to its capital expenditure plan for the year of US$38 billion to US$42 billion, and chief financial officer Wendell Huang said that it was very unlikely that such spending would suddenly drop going forward.
TSMC announced plans for a US$100 billion US investment with US President Donald Trump at the White House in March, on top of US$65 billion pledged for three plants in the state of Arizona, one of which is up and running.
But Trump has said semiconductor-specific tariffs could come soon. Taiwan was also threatened with a 32 per cent reciprocal tariff rate in April, although it has yet to be notified of an updated figure that some countries have received.
Taiwan-listed shares in TSMC surged some 80 per cent last year but have climbed just 5 per cent for the year to date on worries about tariffs and unfavourable currency exchange rates. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
an hour ago
- Straits Times
Japan looks at building first atomic reactor since Fukushima
Find out what's new on ST website and app. TOKYO - Kansai Electric Power Co. is looking into a plan to build Japan's first nuclear reactor since the country soured on the technology following the 2011 Fukushima disaster, the regional utility confirmed. The company will resume surveys for a potential new reactor at the Mihama Nuclear Power Plant in Fukui prefecture west of Tokyo, it said in a statement on July 22 . The move marks Japan's most significant step toward reviving atomic power since the Fukushima Dai-Ichi meltdowns prompted the closure of the nation's reactors. The government is backing nuclear energy to meet an expected rise in electricity demand from the artificial intelligence (AI) boom over the next decade, and public opinion has also become more favourable . 'Nuclear power should continue to be utilised into the future,' Kansai Electric President Nozomu Mori told reporters in Osaka. 'In a country like Japan, which lacks natural resources, the key question is how we can continue to deliver energy, particularly as we look to foster the growth of new industries.' Kansai Electric's plans, which were first reported in local media late on July 18 , sparked a surge in utility shares on July 22, as local markets reopened after a public holiday. The company itself rose as much as 5 per cent in Tokyo. Tokyo Electric Power Co. and Hokkaido Electric Power Co. both climbed as much as 6.7 per cent. Mitsubishi Heavy Industries, a nuclear parts manufacturer, rallied as much as 6.2 per cent. While there is a variety of reactor design options, Mitsubishi Heavy's new model, the SRZ-1200, is the most 'realistic,' said Mr Hiroaki Kitaura, the company's chief manager for plant and maintenance engineering, during a press conference in Tokyo on July 22 . The company will conduct surveys at the Mihama power plant to possibly replace the number 1 unit, which is currently being decommissioned, he said. The study is expected to take 'several years,' Mr Kitaura explained, adding that it's undecided when the study will begin. The revival of nuclear power in Japan after Fukushima has been a long process. Fewer than half of the country's 33 operable reactors have gotten back online due to lengthy regulatory checks and upgrades, as well as local opposition. Outside of Japan, a renaissance in nuclear power has been underway for several years, as governments and companies, particularly in the tech sector, look for ways to meet clean energy targets. Microsoft is investing in the shuttered Three Mile Island nuclear plant in the US, while Amazon is backing a nuclear technology company. Japanese Trade Minister Yoji Muto declined to comment specifically on Kansai Electric's plans on July 22 . He said the government believes Japan will need to secure more carbon-free electricity, and will take necessary steps to encourage investment and strengthen the nuclear supply chain. BLOOMBERG
Business Times
2 hours ago
- Business Times
Chinese investors snap up Hong Kong stocks as flows near record
[HONG KONG] Mainland Chinese investors' purchase of Hong Kong-listed stocks is approaching an annual record, driving a rally that has made a key benchmark in the city one of the world's best performers. Southbound net inflows expanded by another HK$2.7 billion (S$440.8 million) on Tuesday (Jul 22), taking this year's total to HK$800 billion, a whisker away from 2024's previous record of HK$808 billion. The accelerated buying came as the Hang Seng China Enterprises Index gained 24 per cent this year, in a rally fuelled by DeepSeek-led technology breakthroughs, mainland investors' hunt for quality assets and global funds' diversification needs. Also driving the southbound flows is a less robust onshore market, where the CSI 300 benchmark has risen 4.7 per cent in the same period. Southbound flows may exceed HK$1 trillion this year, according to estimates by China International Capital Corp (CICC) analysts including Kevin Liu. They expect the purchases to taper in the current half year as mainland mutual and insurance funds run low on dry powder. Mutual funds may add only HK$100 billion for the rest of the year before they approach the 50 per cent cap for Hong Kong equity positions that applies to most funds, while insurance firms may buy another HK$200 billion, CICC's analysts estimate. The level of mainland investor participation has climbed with the inflows, with southbound turnover accounting for 47 per cent of the Hong Kong market's year-to-date average and up about 10 percentage points from 2024's level. Still, there may be room for retail demand to increase, as exchange-traded funds' turnover was less than 1 per cent of the total last month under the stock link between Hong Kong and the mainland. BLOOMBERG
Straits Times
2 hours ago
- Straits Times
Japan launches anti-dumping probe into stainless steel sheets from China, Taiwan
Find out what's new on ST website and app. Japanese steelmakers say that they have been unable to set prices that reflect rising costs. TOKYO - Japan has launched an anti-dumping investigation into nickel-based stainless cold-rolled steel sheets and strips imported from China and Taiwan, its trade and finance ministries said on July 22. The move follows a petition filed on May 12 by Nippon Steel and other domestic manufacturers, who claim they have been forced to lower prices due to weakening domestic demand, as buyers have shifted to cheaper imports. The Ministry of Economy, Trade and Industry and the Ministry of Finance plan to complete the investigation within a year and will then decide whether to impose anti-dumping duties. According to the application submitted by the steelmakers, imported products were being sold in Japan at prices 20 per cent to 50 per cent lower than those in China and 3 per cent to 20 per cent lower than those in Taiwan. The Japanese steelmakers claim that they have been unable to set prices that reflect rising costs, leading to a decline in operating profits and other damages. Excess production and exports by Chinese steelmakers have become an international concern. Japan is among a number of countries that have criticised Chinese companies for receiving government subsidies to produce excess steel and then exporting it at cheap prices, worsening global market conditions. Top stories Swipe. Select. Stay informed. Singapore Singaporeans aged 21 to 59 can claim $600 SG60 vouchers from July 22 Singapore Miscalculation of MOH subsidies and grants led to $7m in overpayments, $2m in shortfalls Singapore Singaporeans continue to hold world's most powerful passport Asia Indonesia on high alert as dry weather fans forest, peatland fires in Sumatra Singapore 2 charged over alleged role in posting bail for man who later absconded Singapore Teen charged after allegedly selling vaporisers, advertising e-cigarettes on WhatsApp Singapore 2,500 turtles seized in India and sent back to S'pore, put down humanely after salmonella detected Singapore Ports and planes: The 2 Singapore firms helping to keep the world moving While other countries have imposed anti-dumping measures or similar actions against China, Japan has yet to do so. Chairman of the Japan Iron and Steel Federation Tadashi Imai, who is also president of Nippon Steel, has repeatedly warned that the global rise in protectionism could leave Japan vulnerable to inexpensive steel imports, hurting domestic production. REUTERS
