TSMC's Growth: Impact on Semiconductor Manufacturing Landscape

TSMC's strong growth signals increasing demand for leading node chips, indicating a robust semiconductor cycle ahead.

### TSMC's Strong Performance Reflects High Demand for Leading Node Chips
* 💰  TSMC's latest earnings report shows a **45% growth in revenue**, exceeding their **low to mid 20% growth guidance** for the full year.
* 🔝  The company's lead times are increasing, indicating **strong demand** for their **leading node chip manufacturing capabilities**.
* 🎮  TSMC's production is heavily relied upon by companies like NVIDIA for their leading node GPUs, with most of the production for **5nm and 7nm chips** being done by TSMC.
* 📱  While TSMC's revenue was previously skewed towards Apple's smartphone business, it is now shifting towards **NVIDIA and server chips**.
* 📈  The demand for server chips is driving a lot of the **average selling price (ASP) growth** for TSMC.
* 📊  The strong performance of TSMC suggests that the semiconductor cycle is **far from moderating**, with **no signs of a slowdown** in leading node chip demand.
* 📆  TSMC's manufacturing is currently focused on **building inventory**, and it is predicted that this trend will **continue into 2025**.

Mandeep, good to be checking in with you. So what jumps out for you about the TSMC release? I mean, it's a nice sequential acceleration from their second quarter earnings. So remember, they gave us monthly data and, you know, 45% growth when they guided to low to mid 20% growth for the full year. It just goes to show that, you know, the lead times probably are increasing and that's good for someone like TSMC because they are the only ones when it comes to leading node chip manufacturing. And I think all that talks about in video chip delays probably are not getting reflected here. And so clearly they are seeing a ton of demand when it comes to how much, you know, R&D. I think a lot of people outside the industry don't understand how much production TSMC does for other companies, right? So like in video doesn't make its own

chips and sends them orders to TSMC, and they do it. How much do they do in terms of, you know, the outsourcing of chip manufacturing? Yeah. So the best way to think about it is all the leading node GPUs, whether it's five nanometer or seven nanometer, most of the production right now is being done by TSMC. For the trailing node chips, you've got other foundries. Now we know Intel isn't doing well as a foundry, so clearly they are losing business. And typically, you know, TSMC was skewed more towards Apple smartphone business. I mean, that was the biggest portion of their revenue. But right now, it's definitely shifting towards NVIDIA and, you know, the server chips, and it's hard to kind of have a firm read-through on what this print means for Apple, because right now the demand on the server side is just insatiable. And that's what's driving a lot of the

ASP growth for TSMC. You answered my question. I was going to ask you about the Apple exposures, but you went right there. So what about in terms of the broader semi space, which we have seen? You know, some would say the group had gone into a bear market. If you look about where how much it's pulled back since kind of early July. What does it tell you about where we are in the semi cycle? I mean, when I see accelerating growth and given they give us monthly data points and it's trending in the, you know, the higher direction, to me, we're nowhere close to any sort of moderation when it comes to leading node chips. And look, we'll find out from Nvidia a couple of weeks from now that clearly I think they will kind of beat and raise. The question is how much visibility they have when it comes to the customer orders. And look, this is for building inventory, whatever TSMC manufacturing

is for building the inventory. At some point, that inventory build, that will be more than sufficient. I don't think we are there any anytime close, at least this year, but it will probably be a 2025 event.

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TSMC's Strong Performance and Impact on Chip Manufacturing

TSMC's recent release shows a significant acceleration in growth, surpassing their previous guidance.

The company plays a crucial role in outsourcing chip manufacturing for major players like NVIDIA, with a dominant share in producing leading node GPUs.

TSMC's revenue focus is shifting from Apple to NVIDIA and server chips, driven by insatiable demand in the server market.

TSMC's ASP Growth and the Semiconductor Cycle

TSMC's ASP growth is strong, with monthly data points trending upwards, indicating no moderation in demand for leading node chips.

The broader semiconductor space has pulled back since July, but TSMC's growth suggests a different trajectory.

Nvidia's upcoming results are anticipated to beat expectations, raising questions about customer order visibility and inventory building.

The inventory build-up is currently ongoing but not yet sufficient.

It is expected to become more than adequate by 2025.

The speaker does not anticipate reaching that point this year.