TSMC to Benefit Big from AI and Smartphone Demand!

Recent reports indicate that Bloomberg analysts have revised their growth forecast for the global semiconductor foundry industry this year. The annual growth rate, initially projected at 10% to 13% in December, has been adjusted upward to 20%. This significant increase is driven by rising demand for artificial intelligence (AI) technologies and the next generation of smartphones, positioning Taiwan Semiconductor Manufacturing Company (TSMC) as a major beneficiary.

Analysts anticipate strong growth for the semiconductor foundry sector in the second half of this year, with an expected annual sales growth rate of 24%, up from 15% in the first half. Industry experts attribute this upward trend to TSMC's robust performance, which is likely to exceed initial expectations.

Market analysis reveals that TSMC's 3-nanometer production capacity is fully utilized, supported by expanding demand from its diverse customer base. Apple, a key client, is preparing to launch its iPhone 16 series, creating a substantial market opportunity. Moreover, the ongoing increase in AI chip production by NVIDIA and AMD is bolstering demand for TSMC's advanced manufacturing processes.

Analysts forecast that TSMC will benefit significantly from Apple's new chip upgrades and additional orders from other clients. This is expected to drive the company's quarterly revenue in USD beyond previous forecasts, with the annual growth rate now projected to rise from the earlier estimate of 26% to 29% to a revised range of 31% to 34%.

As TSMC leads in advanced manufacturing processes, other key players in the mature foundry market, such as United Microelectronics Corporation (UMC) and Semiconductor Manufacturing International Corporation (SMIC), are also expected to see a recovery. The growth rate for the second half of the year is forecasted at 10%, reversing a 2% decline in the first half. This recovery is driven by increased adoption of chips in new AI PCs, smartphones, and WiFi 7 technologies.

Taiwanese foundries like UMC, Vanguard International Semiconductor (VIS), and Powerchip Semiconductor Manufacturing Corporation (PSMC), which focus on mature manufacturing processes, are proactively positioning themselves to leverage this recovery. Analysts have observed that China's policy of promoting semiconductor self-sufficiency has led to local foundries operating near full capacity, reducing the likelihood of further price reductions. This development is expected to ease pricing pressure on Taiwanese foundries such as UMC, VIS, and PSMC, enhancing their competitive positioning in the global market.