TSMC, the world’s largest chips producer grows Q3 profits by 40% as AI chip demand continues to soar

The Taiwan Semiconductor Manufacturing Co. (TSMC) reported a 40% profit increase in the third quarter of 2024. The company’s impressive performance is due to an increased demand for its AI chips by companies like AMD, Nvidia, and Tesla. 

TSMC recorded a profit of over $9 billion in the third quarter of the financial year against the $6.5 billion it saw in 2023. Revenue reached $23.5 billion, up 36.5%. TSMC enjoyed a successful third quarter because of the demand that AI technology has brought to the semiconductor industry. 

The rapid growth of AI started a trend that persisted in Q3 2024, with many companies investing in hardware capable of running complex AI algorithms and machine learning models. TSMC became a major supplier for companies like Nvidia, an industry leader in the production of graphical processing units (GPUs) that power many AI systems. 

TSMC continues to dominate the chip market

TSMC continues to be at the forefront of the AI chip market, especially in the United States of America, where it has had to expand its operations in response to geopolitical tensions. The company has invested about $65 billion in the development of new labs in Arizona. It made the financial commitment to ensure the company has an efficient supply chain amidst the growing tension between the US and China, which could potentially lead to disruption of operations.

While TSMC currently dominates the chip market, it could face fierce competition from the Korean chip manufacturer Samsung, which recently announced the development of its AI chip. This led to the company seeing over 1400% profit increase in the second quarter, compared to the previous year.

Intel, a competitor chip maker and leader in the market, has struggled to keep up with the pace, after failing to impress the market with its AI chips, resulting in a series of underwhelming quarterly reports. AMD’s shares also fell by 4% following an AI chip unveiling that left investors unimpressed. 

AI’s impact on the global economy

The semiconductor industry isn’t the only one benefitting from the AI boom. The global economy at large is also being transformed. Financial analysts project that about $15 trillion could be added to the global economy by 2030 via AI products.

However, TSMC’s profit surge in the third quarter is just an example of one of the favorable outcomes of AI on the global economy. The company’s success depends largely on access to chip-making materials from countries like the Netherlands. Potential trade disruptions following geopolitical tensions could significantly affect the company’s performance.

Even with these broader issues, AI technology continues to generate interest, and a long line of corporations are already intensifying efforts to jump to the front of the AI chip supply chain.