Smartphone market recovery, AI chip demand surges, Taiwan Semiconductor's August revenue surges 33%

According to the Zhitong Finance and Economics APP, Taiwan Semiconductor (TSM.US) saw a 33% increase in revenue last month, which is undoubtedly a positive signal for investors betting on the recovery of the smartphone market and the continued strong growth in demand for NVIDIA's (NVDA.US) artificial intelligence chips. Data shows that the sales in August reached 250.9 billion New Taiwan Dollars (7.8 billion US dollars), although the growth rate of 45% from the previous month has slowed down. Analysts predict that TSMC's total revenue in the third quarter will increase by about 37%, continuing the strong recovery momentum since the low point of demand after the COVID-19 pandemic. Although this is only a one-month situation, this result may alleviate concerns that the market may have overestimated the sustainability of spending on artificial intelligence infrastructure dominated by NVIDIA's AI GPU. On September 3, NVIDIA's market value evaporated by about 279 billion US dollars, with the stock price experiencing its largest single-day decline, as the company's financial report failed to meet the highest expectations. Analysts led by Mark Li at Bernstein wrote that this implies that TSMC's third-quarter revenue is expected to slightly exceed the average expectations. He stated, "If September follows the average seasonal pattern of the past 8 years, then third-quarter revenue will be 5% to 6% higher than the midpoint of guidance and consensus." It is understood that more than half of the revenue of this largest company in Taiwan, China currently comes from high-performance computing, a business segment mainly driven by demand for artificial intelligence chips. This preferred chip manufacturer for NVIDIA is also the main manufacturer of Apple's (AAPL.US) iPhone main processor. Apple unveiled the iPhone 16 on Monday, a phone designed "from scratch" for artificial intelligence, a feature that will be gradually added to end devices through software updates. Wall Street is generally optimistic about the upcoming rebound in demand for mobile devices. Bloomberg Intelligence analyst Charles Shum stated, "Apple's adoption of Wi-Fi 7 in iPhone 16 and 16 Pro should accelerate technology penetration and boost demand for TSMC's N6 (7-nanometer) and N4 (5-nanometer) nodes, which have been used by Broadcom (AVGO.US), MediaTek, and other companies for Wi-Fi 7 chip production. The performance improvements of the A18 and A18 Pro processors are in line with our expectations, strengthening the positive outlook for sales growth of TSMC's N3E node (i.e., 3nm-level chip process)." During the last earnings announcement, TSMC also provided an optimistic assessment of its business and prospects. In July of this year, the world's largest contract chipmaker raised its annual growth forecast to over 20%, exceeding the previous guidance of around 20%. With the improvement of the market, Taiwan Semiconductor's CEO Wei Zhejia is still leading a large-scale global expansion plan. The company has made initial progress on a project in Arizona and is considering establishing a third wafer fab in Japan. A few weeks ago, the 10 billion euros German factory broke ground