(Bloomberg) — Taiwan Semiconductor Manufacturing Co. raised its forecast for revenue growth this year, the latest signal that global electronics demand has held up better than feared.
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The world’s largest contract chipmaker is now projecting sales growth in the mid-30% range, up from about 30% previously. It also projected revenue of $19.8 billion to $20.6 billion for the September quarter, beating estimates for roughly $18.5 billion.
The outlook from Apple Inc.’s most important chipmaker may allay investors’ fears about an economic slowdown and soaring inflation hurting demand for everything from phones to cars. Last week, Samsung Electronics Co. also reported a better-than-anticipated 21% jump in revenue, triggering an Asian stock rally. TSMC’s role as the predominant manufacturer of advanced semiconductors also likely cushioned its profit margins during the downturn.
Click here for a liveblog of TSMC’s earnings call.
The world’s largest contract chipmaker booked NT$237 billion ($7.9 billion) in net income for the quarter ended June, surpassing the average estimate of NT$219.8 billion. Revenue jumped 44% to NT$534.1 billion in the second quarter, as previously reported. Its gross margin of 59.1% was the highest in 26 years, based on data compiled by Bloomberg.
Concerns persist about rising inventories in the $550 billion semiconductor industry and the longer-term impact of a potential global recession. TSMC’s shares are down more than 20% this year alongside a sector-wide selloff. On Thursday, executives said the company will move some of the spending it planned on capacity and upgrades in 2022 to 2023, reflecting the uncertain environment and equipment delays.
But Credit Suisse analysts including Randy Abrams said TSMC remained one of their top picks because of its market share gains and dominant position.
TSMC, the world’s most advanced maker of silicon chips, has benefited from its most important customer. Over the past year and a half, Apple has launched five types of Mac chips. The Taiwanese firm also continues to ride the auto industry’s growing demand for semiconductors as cars become more digitized.
“We expect TSMC to report an upbeat 2Q and believe there is upside to consensus 2H22 and 2023 forecasts given the company’s solid share gains in” high-performance computing, Citi analysts wrote in a note.
Read more: TSMC Sales Soar 44% in Another Sign of Resilient Tech Demand
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