Smartphone market rebounds, booming demand for AI chips. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reported a 33% increase in revenue in August.

Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR(TSM.US) reported a 33% increase in revenue last month, which is undoubtedly a positive signal for investors betting on the recovery of the smartphone market and the continued strong growth in demand for artificial intelligence chips from NVIDIA Corporation(NVDA.US). The data shows that the sales in August reached 250.9 billion New Taiwan Dollars (7.8 billion US Dollars), however, the growth rate of 45% from the previous month has slowed down. Analysts expect that the total revenue of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in the third quarter will increase by around 37%, continuing the strong recovery momentum from the low demand period after the COVID-19 pandemic. Although this is just for one month, this result may alleviate concerns whether the market has overestimated the sustainability of spending on artificial intelligence infrastructure dominated by NVIDIA Corporation's AI GPU. On September 3rd, NVIDIA Corporation's market value evaporated by about $279 billion, with the stock price experiencing the largest single-day drop, after the company's financial report failed to meet the highest expectations. Analysts at Bernstein led by Mark Li wrote that this implies that the third-quarter revenue of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is expected to slightly exceed the average expectations. He stated, "If September follows the average seasonal pattern of the past 8 years, then third-quarter revenue will be 5% to 6% higher than the midpoint of guidance and consensus." It is understood that more than half of the revenue of this largest company in Taiwan comes from high-performance computing, which is mainly driven by the demand for artificial intelligence chips. This company is the preferred chip manufacturer for NVIDIA Corporation and is also the main manufacturer of Apple Inc.'s iPhone main processor. Apple Inc. released the iPhone 16 on Monday, which is designed "from scratch" for artificial intelligence and this feature will gradually be added to terminal devices through software updates. Wall Street is generally optimistic about the expected rebound in mobile device demand. Bloomberg Intelligence analyst Charles Shum stated, "Apple Inc. adopting Wi-Fi 7 in the iPhone 16 and 16 Pro should accelerate technological penetration and boost demand for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's N6(7nm) and N4(5nm) nodes, which have been used by Broadcom Inc., MediaTek, and other companies for Wi-Fi 7 chip production. The performance enhancement of the A18 and A18 Pro processors is in line with our expectations, strengthening the positive outlook for sales growth of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's N3E nodes (i.e., 3nm-level chip process)." During the last earnings report, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR also made optimistic assessments of its business and outlook. In July of this year, the world's largest contract chipmaker raised its annual growth forecast to over 20%, surpassing the previously guided upper limit of around 20%. With the improvement in the market, CEO Wei Zhejia of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is also leading a large-scale global expansion plan. The company has made initial progress in a project in Arizona and is considering establishing a third wafer plant in Japan. A few weeks ago, the construction of a 10 billion euro factory in Germany began.