‘Maybe TSMC Should Buy Arm’: Sleeping Giant That Makes Tens of Millions of Chips for Intel, Nvidia, AMD Reveals Staggering Profits, Hints at Price Hike to Satisfy Shareholders
In its recently released financial results for the second quarter of 2024, Taiwan Semiconductor Manufacturing Co. (TSMC) reported impressive figures that reflect both the company’s dominant market position and growing demand for the advanced chip technologies it offers.
TSMC is currently the 9th most valuable company in the world with a market cap of $836.35 billion. However, its market cap recently briefly surpassed $1 trillion, placing it at number 8.
The manufacturing giant reported net sales of NT$673.51 billion (US$20.88 billion), up 40.1% from NT$480.84 billion (US$14.91 billion) the previous year. Gross profit also saw a substantial increase, reaching NT$358.13 billion (US$11.10 billion), up 37.6% year-on-year from NT$260.20 billion (US$8.07 billion).
Operating income followed a similar upward trend, rising 41.9% to NT$286.56 billion (US$8.88 billion) from NT$201.96 billion (US$6.26 billion) in the same quarter of the previous year. Net income showed solid growth, rising 36.3% to NT$247.85 billion (US$7.68 billion) from NT$181.80 billion (US$5.64 billion).
Rising prices
Despite the good profits, a price increase seems inevitable.
In a call with Wall Street analysts, Dr. CC Wei, Chairman and CEO of TSMC, said: “Today, we are investing heavily in leading specialty and advanced packaging technologies to support our customers’ growth and enable their success. When customers are doing well, TSMC should also be doing well. For example, we are pleased that the structural profitability of many of our customers has improved in recent years. At the same time, we are facing increasing cost challenges due to increasing process complexity, a leading tax, higher electricity costs in Taiwan, global fiber expansion in higher-cost regions and other cost inflation challenges. Therefore, we will continue to work closely with our customers to share our value. We will also work diligently with our suppliers to deliver cost performance.”
TSMC Earnings Report, TheNextPlatformTimothy Prickett Morgan mused: “Maybe TSMC should buy Arm, build a cloud and cut out all the middlemen?” before adding: “You know, we sometimes just say things to see what they sound like, usually for fun…” While there’s no indication that this will happen, it wouldn’t be the most insane idea – TSMC certainly has the potential to play a role beyond the confines of a foundry services provider, should it so choose.
For the third quarter of 2024, based on an exchange rate of US$1 to NT$32.5, TSMC expects revenues in the range of US$22.4 billion to US$23.2 billion, with expected gross profit margins ranging from 53.5% to 55.5% and operating profit margins between 42.5% and 44.5%. Profit will decline slightly as TSMC invests in its N2 2 nanometer and A16 16 angstrom processes for use in future products.