TSMC Reports 59.6% Revenue Growth in April 2024 Amid AI Chip Demand Surge

Taiwan Semiconductor Manufacturing Company (TSMC) reports 59.6% year-on-year revenue growth in April 2024, driven by high demand for AI chips. TSMC plans to expand production capacity in the US and Japan to address geopolitical concerns and strengthen the semiconductor supply chain.

author-image
Nitish Verma
New Update
TSMC Reports 59.6% Revenue Growth in April 2024 Amid AI Chip Demand Surge

TSMC Reports 59.6% Revenue Growth in April 2024 Amid AI Chip Demand Surge

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, announced on Friday that its consolidated revenue, year for April 2024 reached approximately NT$236.02 billion (US$7.2 billion), representing a staggering 59.6% increase from April 2023. This significant growth is primarily driven by the high demand for advanced semiconductors used in AI hardware, as the global AI boom continues to fuel the need for cutting-edge chips.

Why this matters: The surge in demand for AI chips has significant implications for the global economy, as it drives innovation and growth in various industries. Moreover, the concentration of chip manufacturing in a few key players like TSMC raises concerns about the vulnerability of the tech supply chain to geopolitical shocks and natural disasters.

TSMC, which controls more than half of the world's output of chips and supplies them to giants like Apple and Nvidia, has seen a surge in demand following the success of OpenAI's ChatGPT. The company's first-quarter revenue increased 13% year-on-year to US$18.87 billion, with expectations of a 27.6% rise in the second quarter. The AI gold rush has sparked a frenzy for advanced chips, and TSMC is at the forefront of meeting this demand.

However, TSMC's dominance in the global chip industry has raised concerns about the vulnerability of the semiconductor supply chain to geopolitical shocks. With the bulk of its fabrication plants based in Taiwan, a self-ruled island claimed by neighboring China, governments have been pressuring TSMC to diversify its production. US Commerce Secretary Gina Raimondo warned that an invasion of Taiwan by China and a seizure of TSMC would be "absolutely devastating" to the American economy, as the US currently buys 92% of its leading-edge chips from TSMC in Taiwan.

In response to these concerns, TSMC has announced plans to expand its production capacity beyond Taiwan. The company recently revealed plans for a third factory in the United States, raising its total investment in the country to US$65 billion. TSMC has also launched a new US$8.6 billion plant in Japan's Kyushu island and is planning another facility in Kumamoto for more advanced chips.

Despite its expansion efforts, TSMC faces challenges in its overseas projects, including a lack of skilled human resources required for the highly specialized chip manufacturing process. The company also remains vulnerable to natural disasters, such as the recent major earthquake in Taiwan, although it assured customers that the impact on its production lines was minimal.

As the AI revolution continues to drive unprecedented demand for advanced semiconductors, TSMC's 59.6% year-on-year revenue growth in April 2024 underscores the company's critical role in the global chip industry. With plans to expand production capacity in the US and Japan, TSMC aims to address geopolitical concerns and strengthen the resilience of the semiconductor supply chain. However, the challenges of skilled labor shortages and vulnerability to natural disasters remain hurdles in TSMC's path to meeting the ever-growing demand for its cutting-edge chips.

Key Takeaways

  • TSMC's April 2024 revenue reaches NT$236.02 billion, up 59.6% year-on-year.
  • AI demand drives growth, with TSMC controlling over half of global chip output.
  • TSMC's dominance raises concerns about supply chain vulnerability to geopolitics.
  • TSMC expands production capacity in US and Japan to address concerns.
  • Challenges remain, including skilled labor shortages and natural disaster risks.