The Taiwan Semiconductor Manufacturing Company (TSMC) has made impressive strides in the AI chip market, driven in large part by its partnership with NVIDIA. According to Taiwanese analysts, TSMC earned over $10 billion in AI-related revenue during the second quarter, reflecting the growing role of NVIDIA in TSMC’s customer base, traditionally dominated by Apple.
This strong performance in Q2 is expected to continue into 2025 as AI chips become even more integral to the tech landscape.
While TSMC is best known for manufacturing AI GPUs for NVIDIA, its portfolio extends beyond just graphics cards. The company also produces application-specific integrated circuits (ASICs) and memory controllers for high-bandwidth memory applications, key components in AI systems.
TSMC’s latest earnings report, released last week, showed a 61% year-on-year increase in revenue, primarily fueled by the soaring demand for AI chips. The company is projecting a 38% revenue growth for the current quarter, with a midpoint forecast of $32.4 billion. This forecast indicates a continued upward trajectory for the company, driven largely by its advanced process technology, which is essential for cutting-edge AI applications and high-end consumer electronics.
In the second quarter alone, AI-related products accounted for around $10 billion, or roughly a third of TSMC’s total revenue. According to official figures, 60% of the revenue came from high-performance computing (HPC), with smartphones contributing another 27%. Dr. C.C. Wei, TSMC’s CEO, pointed out that the company’s 30% annual revenue growth is largely attributed to AI-driven demand, thanks to its advanced 3-nanometer and 5-nanometer chip technologies.
Looking ahead, analysts predict that TSMC’s AI-related revenue will continue to climb. They expect the company could generate NT$868 billion ($29.51 billion) in AI sales by the end of this year, a dramatic increase from last year’s NT$434 billion. If this growth continues, AI could account for as much as half of TSMC’s total revenue in the near future.
TSMC’s unique position as the only contract manufacturer capable of producing leading-edge chips at scale, such as NVIDIA’s 4-nanometer GPUs, gives it a significant advantage in the rapidly growing AI sector. With mass production of 2-nanometer chips set to begin this year, TSMC is poised to remain at the forefront of the AI chip manufacturing race, alongside its key partner, NVIDIA.