"Maybe TSMC should buy Arm": Sleeping giant that makes tens of millions of chips for Intel, Nvidia, AMD reveals staggering profits and hints at a price hike to please shareholders

In recently released financial results for the second quarter of 2024, Taiwan Semiconductor Manufacturing Co. (TSMC) posted impressive figures that reflect both its dominant market position and the growing demand for the advanced chip technologies it offers.

TSMC is currently the 9th most valuable company in the world with a market cap of $836.35 billion, but it briefly exceeded $1 trillion recently, putting it into 8th place.

The manufacturing behemoth reported net sales of NT$673.51 billion (US$20.88 billion), marking a 40.1% increase from the previous year’s NT$480.84 billion (US$14.91 billion). Gross profit also saw a substantial rise, reaching NT$358.13 billion (US$11.10 billion), up 37.6% year-over-year from NT$260.20 billion (US$8.07 billion).

Operational income followed a similar upward trend, with a 41.9% increase to NT$286.56 billion (US$8.88 billion) compared to NT$201.96 billion (US$6.26 billion) in the same quarter of the previous year. Net income demonstrated solid growth, with a 36.3% increase to NT$247.85 billion (US$7.68 billion) from NT$181.80 billion (US$5.64 billion).

Rising prices

Despite healthy profits, a price hike appears to be imminent.

During a call with Wall Street analysts, Dr. C.C. Wei, TSMC’s Chairman and CEO, stated, “Today, we are investing heavily in leading-edge specialty and advanced packaging technologies to support our customers’ growth and enable their success. If customers do well, TSMC should do well. For example, we are happy to see many of our customers’ structural profitability improving in these past few years. At the same time, we face rising cost challenges due to increasing process complexity, a leading load, higher electricity costs in Taiwan, global fiber expansion in higher-cost regions, and other cost inflation challenges. Therefore, we will continue to work closely with our customers to share our value. We will also work diligently with our suppliers to deliver on cost performance.”

Reporting on TSMC’s earnings, TheNextPlatform’s Timothy Prickett Morgan mused, “Maybe TSMC should buy Arm, build a cloud, and just cut out all the middle-people?” before adding, “You know we sometimes just say stuff to see what it sounds like, mostly for amusement’s sake…” While there is no suggestion of this happening, it wouldn’t be the maddest of ideas – TSMC certainly has the potential to assume a role beyond the boundaries of foundry service provider should it wish to.

For the third quarter of 2024, based on an exchange rate of US$1 to NT$32.5, TSMC anticipates revenues of between US$22.4 billion and US$23.2 billion, with expected gross profit margins ranging from 53.5% to 55.5% and operating profit margins between 42.5% and 44.5%. Profits will take a bit of a drop because TSMC is investing in its N2 2 nanometer and A16 16 angstrom processes for use in future products.