(Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s third quarter revenue slid less than projected as demand from artificial intelligence players helped offset sagging smartphone and laptop chip sales.
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TSMC, the main chipmaker to Apple Inc. and Nvidia Corp., reported July-September revenue of NT$546.7 billion ($17 billion) according to Bloomberg’s calculations. That marked an 11% decline on the prior year but beat the average estimate of NT$531.5 billion.
Data centers driving AI are boosting demand for some of TSMC’s biggest clients, including Nvidia, as well as that of memory used with those systems. The preliminary sales numbers come as investors look for signs that climbing orders for AI chips are overcoming supply constraints and translating into sales, and may alleviate concerns about a prolonged sector-wide slump.
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TSMC is the primary contract manufacturer of Nvidia’s AI accelerator chips, now sought widely to train large data models such as the one underpinning OpenAI’s ChatGPT.
Strong demand for TSMC’s advanced packaging service may also bolster sales, even as the semiconductor sector continues to work through excess inventory, according to Bloomberg Intelligence analyst Charles Shum. A favorable exchange rate could further help its profit margin, he said.
Investors will be focusing on the Taiwanese firm’s outlook when it reports July-September earnings on Oct. 19. TSMC is seen as a bellwether for the tech sector, amid growing concern for slowing sales growth at tech giants such as Apple.
TSMC’s stock closed about 0.8% higher in Taipei on Friday. Its shares have gained more than 18% since the beginning of the year.
–With assistance from Cindy Wang.
(Updates with analyst’s comment from the 5th paragraph)
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