TSMC posts 34% August revenue surge on booming AI chip demand

Taiwan Semiconductor Manufacturing Co., better known as TSMC, recorded NT$335.8 billion in sales for the month of August, equal to roughly $11.1 billion, and a 34% surge compared to the same month last year, according to its earnings report released Wednesday.

Wall Street analysts had been looking for just 25% growth across the entire September quarter, but TSMC blew through that before the quarter even ended.

The company sits at the center of this AI chip craze. TSMC makes the Nvidia accelerators powering nearly every major generative AI model in use today. From ChatGPT to enterprise-level AI infrastructure, these chips have become the preferred tool for training complex machine-learning systems.

Nvidia depends on TSMC to build them. The Taiwanese firm also manufactures high-end chips for Apple’s iPhones, making it one of the few companies producing at scale for both consumer and enterprise tech.

Broadcom’s $10B XPU order puts pressure on Nvidia’s grip

Investors are now looking beyond traditional GPUs. On September 10, Broadcom confirmed a $10 billion custom chip deal involving AI accelerators known as XPUs.

These chips are being developed in partnership with OpenAI and are designed to handle AI processing without depending on Nvidia’s architecture.

Unlike general-purpose GPUs, XPUs are built specifically for the needs of major cloud providers. Broadcom’s stock rose following the news, echoing last Tuesday’s move in Oracle shares, which hit a record after the company gave an aggressive forecast for its cloud business.

Meanwhile, Atif Malik, a senior analyst at Citi, cut his price target for Nvidia from $210 to $200, saying Nvidia faces “real competitive risks from Broadcom and other hyperscalers putting money into custom silicon.”

Atif kept his Buy rating, but the cut was enough to trigger warnings. Still, Nvidia shares went up in premarket trading the same day, showing investors are betting on near-term strength, even as the long-term outlook grows cloudy.

Citi now sees XPU sales growing 53% by 2026, while traditional AI GPU sales are only expected to rise 34% in the same timeframe.

Right now, Nvidia holds about 90% of the AI processor market, but if this custom-chip trend continues, that number is on the line.

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