TSMC Annual Revenue Expected to Increase by 30%... "Rising Orders from Apple, Nvidia, AMD, Qualcomm" [Taiwan Chip News]

Apple iPhone 16 and Nvidia H Series
3nm and 4nm Orders Expected to Increase... Price Hikes Driving Force
AMD and Qualcomm AI Processor Orders Also Rising

The world's largest foundry (semiconductor contract manufacturing) company TSMC's annual revenue is expected to surge more than anticipated, according to forecasts from the Taiwanese industry. With increasing orders from major clients such as Apple, Nvidia, AMD, and Qualcomm, the revenue growth rate for this year is projected to exceed 30%.

TSMC logo displayed at the TSMC Innovation Museum.
Photo by Reuters Yonhap News

According to the Taiwanese industry, TSMC is expected to secure many orders next month with the launch of Apple's iPhone 16 series new products. Shipments of the 'H series' chips, including Nvidia's flagship AI chip H200, are also expected to increase. As AMD expands production of AI PC processors, orders for AMD's AI accelerator 'MI300' are also rising. The MI300 is a graphics processing unit (GPU) used in data centers for AI training and inference.

With increasing demand for customer products, TSMC's order performance is also expected to grow. The Taiwanese industry anticipates a sharp increase in revenue in the second half of the year. The overall revenue growth rate for this year is likely to be revised upward from the previous estimate of 26-29% to 31-34%.

TSMC has not disclosed specific information about its customers, but it is widely known in the industry that TSMC is the exclusive manufacturer of processors for the iPhone 16 series. In particular, the iPhone 16 series is expected to adopt entirely new A18 and A18 Pro processors. This is expected to significantly boost demand for TSMC's 3nm (nanometer; 1nm is one billionth of a meter) process.

It is also favorable for TSMC that about 270 million iPhones have exceeded their device lifespan, which is generally considered to be four years. If the demand for new device replacements this year exceeds expectations, TSMC's second-half performance is expected to increase significantly compared to the first half.

In Nvidia's case, the mass shipment of the latest Blackwell platform AI chips has been delayed by one quarter, but this is not expected to pose a major problem. Strong demand for the existing Hopper platform H series AI chips continues. Orders for TSMC's advanced processes are expected to continue steadily. Nvidia's H200 is manufactured using TSMC's 4nm process.

Supported by clients such as Nvidia, TSMC has raised prices for its 3nm and 5nm processes. According to the Taiwanese industry, TSMC has informed its customers that it will increase foundry prices for 3nm and 5nm processes by about 8% in line with demand for cutting-edge processes and packaging (post-processing). As product unit prices rise, the company's profitability improves. Jensen Huang, CEO of Nvidia, stated in June, "TSMC's wafer prices are too low," and added, "TSMC's financial performance is undervalued compared to its contributions to the global technology industry."

AMD and Qualcomm are increasing their chip contract manufacturing orders with TSMC to expand their AI PC businesses. The sales outlook for AMD's MI300 AI chip has been revised upward. Lisa Su, CEO of AMD, said during the earnings conference call on the 30th of last month that MI300 sales "exceeded expectations," with second-quarter (April-June) MI300 sales surpassing $1 billion (approximately 1.4 trillion KRW). CEO Su emphasized that demand for AI chips is "larger than expected."

TSMC is optimistic about the growth of the AI market. At the earnings presentation in April, TSMC Chairman Wei Zhejia raised the outlook for AI orders and revenue share. The visibility of AI orders is expected to extend from 2027 to 2028.

TSMC is expected to continue growing in the AI market based on its advanced process technology, ahead of foundry competitors such as Samsung Electronics and Intel. Overseas investment institutions have recently revised upward their mid-to-long-term outlook for TSMC's AI application revenue. They forecast that AI applications will account for 35% of TSMC's total revenue by 2028.

Taiwan Economic Daily News = Reporter In Hoojung / Translation = Asia Economy

※This article is reprinted based on a strategic partnership between this publication and Taiwan Economic Daily News.