Taiwan Semiconductor Boosts Nvidia, Broadcom Stocks with Positive Update

Rowan Ashford

ago 2 hours

Taiwan Semiconductor Boosts Nvidia, Broadcom Stocks with Positive Update

The demand for artificial intelligence (AI) continues to drive significant growth within the semiconductor industry. Recently, Taiwan Semiconductor Manufacturing Company (TSMC) provided a positive update that is likely to impact tech giants such as Nvidia and Broadcom.

Strong AI Demand Drives Semiconductor Growth

TSMC, the world’s largest contract chipmaker, reported robust financial results for the fourth quarter. The company recorded revenues of $33.7 billion, marking a 26% year-over-year increase and a sequential rise of 2%. This outstanding performance contributed to earnings per American depositary receipt (ADR) of $3.14, which is up 35% compared to the previous year.

Advanced Technology Contributions

Much of TSMC’s success stems from its advanced technologies. The company’s leading-edge 3-nanometer (nm) chips accounted for 28% of total revenue, while 5nm chips represented 35%. Notably, high-performance computing (HPC) generated a remarkable 55% of TSMC’s total sales. This demonstrates strong demand for AI-capable chips and highlights TSMC’s ability to meet this need.

Future Projections and Increased Capital Expenditure

Looking ahead, TSMC expects the AI-driven growth to persist. The company has projected first-quarter revenues between $34.6 billion and $35.8 billion, suggesting a growth of approximately 38% compared to the previous year.

To capitalize on this demand, TSMC plans to significantly increase its capital expenditures (capex) to between $52 billion and $56 billion, surpassing Wall Street’s expectations of $41 billion. This substantial investment is indicative of TSMC’s confidence in the continued demand for AI chips.

Impact on Nvidia and Broadcom

The implications of TSMC’s report are significant for both Nvidia and Broadcom. As the demand for AI chips grows, TSMC’s increased production capacity will better support these companies faced with a shortage of AI-capable hardware. Reports indicate that both Nvidia and Broadcom have requested TSMC to enhance production to alleviate existing supply constraints.

Nvidia: Current stock growth has reached approximately 1,000% since the AI boom began.
Broadcom: Stock has increased by around 530% during the same timeframe.

Moreover, despite the rising investments in infrastructure, major tech companies like Microsoft have noted a continued capacity constraint. Microsoft CFO Amy Hood stated that demand for AI infrastructure is set to exceed current supply, particularly evident in the Azure service.

Conclusion

TSMC’s recent financial updates and plans to expand production capacity signal that the AI boom remains robust. Increased manufacturing capabilities could lead to greater availability of chips, benefitting Nvidia and Broadcom significantly. With the semiconductor market poised for growth, both companies stand to achieve further revenue and profit expansion as the race to meet AI demand continues.