Increased sales growth due to demand for AI and advanced processes
Performance announcement on the 15th, 4th quarter outlook, profitability confirmed due to expansion of 2-nano production
TSMC, a Taiwanese semiconductor consignment manufacturing company, surpassed last year's annual sales in just nine months this year. The growth rate in the third quarter, which combines monthly sales, also exceeded 50% compared to the same period last year.
According to September sales data released by TSMC on the 8th, cumulative sales from January to September this year were approximately NT$3.8987 trillion, an increase of 41.1% compared to the same period last year. It has already surpassed last year's annual sales of about 3.8091 trillion Taiwan dollars.
The growth rate accelerated in the third quarter. The combined sales from July to September amounted to approximately NT$1.4942 trillion, an increase of 50.9% compared to the same period last year and 17.6% compared to the previous quarter. The year-on-year growth rate in Taiwan dollars increased further from 36.0% in the second quarter. This figure is calculated based on monthly disclosures.
Sales in September, the last month of the quarter, were NT$511.857 billion. It decreased by 0.6% from August, when monthly sales recorded the highest ever, but increased by 54.6% compared to the same month last year. Sales, which increased by 10.1% in August compared to the previous month, were maintained at a similar level in September.
This performance trend is in line with the strong demand for AI and advanced processes that the company previously suggested. TSMC explained at its performance briefing in July that AI-related demand is continuing to be strong. High-performance computing (HPC) sales in the second quarter announced at the time increased by 20% compared to the previous quarter, and accounted for 66% of total sales. Based on this, the company predicted that dollar-based sales this year will increase by slightly more than 40% compared to the previous year.
Investment is also expanding to respond to increasing demand. TSMC announced in July that it had increased its facility investment plan for this year to $60 billion to $64 billion and would allocate 70 to 80 percent of the investment to cutting-edge processes. The third quarter business outlook presented the rapid expansion of 2-nano production along with demand for advanced processes as major factors.
The process of expanding production also entails initial cost burden. TSMC predicted that the expansion of 2-nano production would act as a factor in lowering the gross profit ratio in the second half of the year by about 3 to 4 percentage points. The explanation is that strong demand for advanced processes and improved productivity partially offset this. The company's projection of gross profit margin for the third quarter is 65-67%, which is lower than the actual figure for the second quarter of 67.7%.
In the third quarter performance announcement scheduled for the 15th, the main point to watch is how the increase in sales and the cost burden due to expansion of 2-nano production are reflected in actual profitability. Changes in the fourth quarter sales forecast and annual growth forecast serve as the basis for assessing whether the high growth trend will continue until the end of the year.
