Demand remains strong! Taiwan Semiconductor's July sales surged 44.7% year-on-year

After the comprehensive performance in Q2 exceeded expectations, Taiwan Semiconductor's sales in July continued to show strong growth.

On Friday, August 9th, Taiwan Semiconductor announced its latest monthly performance. Thanks to strong demand for AI and price hike expectations, Taiwan Semiconductor's sales in July reached NT$256.95 billion, a year-on-year increase of 44.7% and a month-on-month increase of 23.6%. Sales since the beginning of the year amounted to NT$1.5231 trillion, a year-on-year increase of 30.5%.

Today, Taiwan Semiconductor's stock in Taiwan opened high and continued to rise, closing with a 4.2% increase. In the U.S. stock market, despite a slight pullback in Taiwan Semiconductor's stock price since "Black Monday," the company's cumulative increase so far this year still exceeds 60%.

Morgan Stanley even believes that after recent sell-offs, Taiwan Semiconductor's valuation is more attractive. The institution recently listed Taiwan Semiconductor as a top pick.

Morgan Stanley analyst Charlie Chan wrote in a report that in the long-term semiconductor downturn cycle, we are optimistic about the quality and defensiveness of Taiwan Semiconductor. Confirming price hikes and continued strength in artificial intelligence (AI) capital expenditure should be key catalysts for Taiwan Semiconductor.

Chan expects that with price hikes, "Taiwan Semiconductor should achieve a gross margin of over 55% by 2025, and after achieving economies of scale at overseas wafer fabs, gradually approach a gross margin level close to 60% between 2028 and 2030."

According to Taiwanese media reports, IC design companies revealed that Taiwan Semiconductor will not only raise prices in 2024, but also successively informed multiple customers in July of the price increase for the 5/3 nanometer process in 2025, as costs continue to soar, with increases ranging from 3% to 8%. This will maintain significant pressure on the 53% gross margin in the long term, successfully shifting it to the customer base.

Industry insiders stated that Taiwan Semiconductor is not only receiving strong orders for AI and HPC, but also entering the peak season for consumer electronics shipments, holding large orders from Apple, Qualcomm, MediaTek, as well as Intel, AMD, NVIDIA, and Broadcom. The 3/5 nanometer capacity will continue to be fully utilized, and Taiwan Semiconductor is expanding its capacity to meet strong customer demand.

Taiwan Semiconductor achieved outstanding results in the second quarter, with sales, net profit, and gross margin all exceeding expectations. The company's Q2 net revenue was NT$673.51 billion, a year-on-year increase of 40.1%; net profit was NT$247.85 billion, a year-on-year increase of 36.3%; and the gross margin reached 53.2%. **Analysts predict that Taiwan Semiconductor's third-quarter revenue will increase by 37% to NT$747.4 billion **