Nvidia’s strong third-quarter performance and guidance further bolster the positive outlook for Taiwan Semiconductor Manufacturing according to Bank of America analysts.
“These results highlight robust structural AI demand, with minimal digestion periods as adoption accelerates,” noted analysts led by Brad Lin.
They emphasized that Nvidia’s consistent annual cadence for developing data center GPUs has been a key driver for TSMC, contributing to growth in average selling price (ASP) content.
“The ongoing scaling of AI models reinforces TSMC’s demand for advanced nodes and its industry leadership. Moreover, Nvidia’s strong gross margin outlook through 2025 reflects the enhanced value TSMC provides to clients, beyond ASP increases,” the analysts added.
AI demand continues to outstrip supply, with Nvidia’s Hopper and Blackwell GPUs facing ongoing supply constraints.
Bank of America anticipates that Blackwell GPU demand will surpass supply into fiscal 2026, driven by significant AI investments—a positive signal for TSMC’s business outlook.
To address Chip-on-Wafer-on-Substrate capacity constraints, TSMC plans to expand its monthly production from 35,000–40,000 units in Q4 2024 to over 80,000 units by Q4 2025.
“As AI models grow increasingly complex and require more computational power, we believe TSMC is well-positioned to meet these evolving demands,” said Brad Lin and his team.
Nvidia noted that demand remains strong despite shifts in its product portfolio, with no significant slowdowns. The demand for Hopper GPUs is particularly robust, extending into the next year and potentially exceeding previous investor concerns.
The overall AI demand landscape remains strong, with no signs of slowing, driven by continued adoption and migration. Additionally, the upcoming shipments of GeForce RTX in the fourth quarter are anticipated to maintain healthy channel inventory levels, potentially benefiting suppliers such as King Yuan Electronics.
