Taipei: Taiwan Semiconductor Manufacturing Co raised its projections for full-year revenue growth after results beat estimates, riding a global wave of spending on artificial intelligence (AI).

The chipmaker for Apple Inc and Nvidia Corp now expects sales to grow more than the maximum mid-20% it had guided toward previously.

TSMC expects revenue of as much as US$23.2bil this quarter, above analysts’ projections. And it narrowed its forecast for capital spending - a key indicator of where TSMC sees future demand - to the high end of its original forecast, to US$30bil to US$32bil from as low as US$28bil previously.

The raised outlook conveys TSMC’s confidence in the longevity of an AI boom that began in late 2022 with the advent of OpenAI’s ChatGPT. That spurred global tech giants from Microsoft Corp to Baidu Inc to splurge on AI infrastructure, largely powered by Nvidia accelerators.

Market expectations had risen in the weeks leading up to TSMC’s report. The wider smartphone market - another big driver for Taiwan’s largest company - is on a path to recovery.

Apple provided upbeat guidance to suppliers on shipments of its upcoming iPhone 16, based on the potential strength of its new AI services. That helped TSMC report a better-than-anticipated 36% rise in June-quarter profit.

Net income rose to NT$247.8bil or about US$7.6bil, after the company disclosed its second-quarter sales grew at the fastest pace since 2022.

Shares of the world’s largest maker of advanced chips have more than doubled since the AI boom took off in late 2022, and hit a series of all-time highs as the firm’s market capitalisation briefly crossed the US$1 trillion mark.

Still, investor euphoria over TSMC’s prospects diminished Wednesday after Bloomberg Businessweek published comments by US Republican presidential nominee Donald Trump, who said he’s at best lukewarm about defending Taiwan in the event of Chinese aggression.

On top of that, the United States is also mulling stricter chip curbs on China, Bloomberg News reported, triggering a global tech stock selloff as investors pondered the fallout for the world’s largest semiconductor arena.

Caution about AI is now emerging in corners of the market. This month, Goldman Sachs warned that the biggest US tech firms may be spending too much on AI.

Before the results, SemiAnalysis’s Chaolien Tseng had warned that TSMC’s stock may take a hit if it didn’t lift its 2024 revenue growth to at least 25%.

 - Bloomberg