RESOLVING THE LEDGER
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Taiwan Semiconductor Manufacturing Co . on Monday reported a big sales jump for July, as demand for its artificial intelligence-related chips continued to strengthen.
TSMC, the world's biggest chip manufacturer, reported revenue for July of 467.58 billion New Taiwan dollars ($14.5 billion), up 44.7% year on year.
Investors are closely scrutinizing Big Tech spending and return on investment, as the sector continues to funnel unprecedented amounts of capital into building out AI infrastructure, including designing and buying semiconductors.
TSMC manufactures chips for a variety of customers, including Nvidia and Google 's own custom semiconductors, so the Taiwanese firm's sales are a closely watched metric of tech sector demand.
"TSMC is now guiding for 40% growth in revenues for this year, so July's numbers put it ahead of that figure. This is no mean feat and highlights that for now demand is still there and takes the pressure off August and September somewhat in that these two months don't have to be as aggressive," Ben Barringer, head of technology research at Quilter Cheviot, told CNBC.
"Demand in the semiconductor industry, however, can shift quickly so it is important that people do not read too much into the monthly numbers as they can jump around. The company is, however, continuing to expand with various additional investments, so you would hope this level of chip production can continue."
TSMC does not provide commentary on its monthly revenue figures. But the company's second-quarter earnings reported last month showed that high-performance computing, which is where TSMC books AI chip sales, accounted for 66% of revenue.
The company struck a bullish tone during its earnings report and said it expects 2026 revenue to increase by slightly above 40% in U.S. dollar terms. TSMC also raised its capital expenditure projection to between $60 billion and $64 billion for this year.
"AI-related demand continues to be extremely robust," said TSMC Chairman C.C. Wei.
European semiconductor stocks rose on Monday with ASML up more than 2%, and Infineon and STMicro also trading higher.
Amid some of the market jitters around AI capex, semiconductor stocks have seen a recent sell-off. The PHLX Semiconductor index , which tracks a basket of chip stocks, is down around 15% from its June high. However, it is still around 72% higher for the year. TSMC's shares are up 50% for the year.
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