The revenue growth of TSMC, the world’s largest semiconductor foundry company, slowed last month amid growing concerns about an artificial intelligence (AI) bubble. On the 10th (local time), TSMC announced that its October revenue increased by 16.9% compared to the previous year, marking the lowest level since February of last year. However, since this figure represents just one month’s performance, it is limited in determining future trends.
Last week, it was revealed that Scion Asset Management, led by Michael Burry, the real-life figure from the film “The Big Short,” holds put options on Nvidia and Palantir, reigniting the AI bubble debate. However, industry executives remain optimistic about AI-driven growth, as major tech companies like Meta Platforms, Alphabet, Amazon, and Microsoft are accelerating their investments in data centers. These companies plan to invest over $400 billion in AI infrastructure next year, a 21% increase from this year.
Jensen Huang, CEO of Nvidia, a leading AI semiconductor company and a key client of TSMC, recently visited Taiwan and met with TSMC Chairman Mark Liu to request an expansion of chip supply, indicating strong chip demand. Huang stated, “Our business is getting stronger every month.” Though Nvidia’s order volume wasn’t disclosed, Taiwanese media reported it could be significant enough for TSMC to increase 3-nanometer wafer production capacity at its Taiwan facilities by up to 50% monthly.
Currently, TSMC is reportedly struggling with limited production capacity. In October, Liu stated, “Production capacity remains very tight” and “we are doing our best to narrow the gap between demand and supply.” Major chip design firms are competing to secure more volume from TSMC. TSMC is also a key partner for AMD and Qualcomm, and it manufactures chips for Apple’s iPhones.
Qualcomm CEO Cristiano Amon recently argued, “The world is underestimating AI’s growth potential.” Previously, TSMC raised its annual revenue growth forecast from approximately 30% to the mid-30% to 40% range (in U.S. dollars). The company expects its AI-related chip sales to double this year and continue to grow annually in the mid-40% range over the next five years.