TSMC reports 9.4% sales growth in Jan-Feb 2024, explicitly attributed to AI chip demand and capacity utilization.

Taiwan Semiconductor Manufacturing Company reported revenue growth of 9.4% during the first two months of 2024, with sales reaching NT$397.4 billion ($12.6 billion) from January to February. This growth comes as the company rides a wave of global artificial intelligence development, which has helped offset potential headwinds from slowing iPhone sales. Apple Inc., which accounted for 25% of TSMC's business last year, is struggling to sustain momentum for the iPhone, particularly in China.

TSMC, the main chipmaker to Nvidia Corporation, has positioned itself as a major beneficiary of accelerating artificial intelligence activity that intensified following OpenAI's rollout of ChatGPT. The world's most advanced chipmaker is considered one of the primary beneficiaries of the rise in large language model development, which requires high-end chips. This week, JPMorgan became the latest brokerage to raise its price target on the Taiwanese company, citing not just AI but potentially business from Intel Corporation as well in coming years.

Analysts including Gokul Hariharan described TSMC as "the enabler for almost all AI processing at the data center and the edge." In January, company executives said they expect a return to solid growth this quarter and gave themselves room to raise capital spending in 2024, suggesting TSMC anticipates a recovery in smartphone and computing demand following a years-long slump that industry players expect to end in 2024.

TSMC's second-largest customer makes up 11% of sales, with analyst Mark Li at Bernstein estimating it is Advanced Micro Devices Inc., which is aiming to gain share in the AI chip market. TSMC does not disclose the names of its top customers.