Taiwan Semiconductor Manufacturing Co. (TSMC) has increased its full-year revenue growth projections after surpassing expectations in its latest financial results, taking advantage of the global surge in artificial intelligence (AI) spending. The chipmaker, known for supplying Apple Inc. and Nvidia Corp. , now anticipates sales to grow by more than the previously estimated maximum mid-20%. TSMC is forecasting revenue of up to $23. 2 billion for this quarter, exceeding analysts' projections. Additionally, it has revised its forecast for capital spending, raising it to the higher end of the original estimate at $30 billion to $32 billion. The increased outlook reflects TSMC's confidence in the continued success of the AI boom that began with OpenAI's ChatGPT in late 2022. This wave of AI adoption has incentivized major tech companies like Microsoft Corp.

and Baidu Inc. to invest heavily in AI infrastructure, powered largely by Nvidia accelerators. With the market's positive outlook leading up to TSMC's report, the wider smartphone market—a significant driver for Taiwan's largest company—has shown signs of recovery. Apple's optimistic guidance on shipments of its upcoming iPhone 16, based on the potential strength of its new AI services, further contributed to TSMC's better-than-expected 36% profit rise in the June quarter. TSMC's net income increased to NT$247. 8 billion ($7. 6 billion), with second-quarter sales growing at the fastest pace since 2022. The company's shares have more than doubled since the onset of the AI boom, reaching several all-time highs and temporarily crossing the $1 trillion market capitalization mark. According to Bloomberg Intelligence analyst Charles Shum, ASML's significant increase in order bookings in the second quarter suggests that TSMC's N2 development is progressing well, potentially accelerating capacity expansion. TSMC is expected to begin mass production in the second half of 2025, starting with approximately 30, 000-wafer monthly capacity in Hsinchu, Taiwan. Shum believes TSMC's N2 process will be priced at least 15% higher than its N3 process. Despite TSMC's positive outlook, investor optimism waned somewhat after reports of US Republican presidential nominee Donald Trump expressing lukewarm commitment to defending Taiwan against Chinese aggression. Additionally, Bloomberg News reported that the US is considering stricter restrictions on chip exports to China, causing a global sell-off of tech stocks as investors contemplated the potential impact on the world's largest semiconductor market. A cautious sentiment toward AI is beginning to emerge in certain areas of the market. This month, Goldman Sachs warned that major US tech firms may be overspending on AI. Before the release of TSMC's financial results, Chaolien Tseng from SemiAnalysis cautioned that the company's stock could suffer if it didn't raise its projected revenue growth for 2024 to at least 25%.