Profits surge at Apple and Nvidia supplier TSMC

**Bissi Adebayo** (0:01)
Another record for the world's biggest chip maker, TSMC. It's World Business Express from the BBC World Service, IMBC Adibayo.
Also, we'll have the latest snapshots of the US economy from retail sales and job figures. And we'll also visit Europe's biggest port as Rotterdam tries to reinvent itself for a greener future.
The company behind many of the world's most advanced computer chips has reported another record quarter. Taiwan Semiconductor Manufacturing Company, or TSMC, which makes chips for products including Apple's iPhones and Nvidia's AI processors, says profits jumped by more than 77%. While the world's biggest contract chip maker says demand remains extremely strong, and it's investing billions more to expand production. Joanne Chow is research manager at Trendforce in Taipei.

**Joanne Chow** (0:57)
Everyone knows that AI is quite strong. What TSMC said about AI is even stronger than our original expectation. And they said the AI demand is stronger and stronger even through 2030 And I'm a bit surprised that they can even do the upward revision on their year-over-year performance in this year to 40% year-over-year growth, and also revising up their K-Pax plan to 60 to 64 billion US dollars. K-Pax's capital expenditure, that they spending monies on expanding their capacity, building up new FAPs, maybe in the R&D development. I think that's a positive part.

**Bissi Adebayo** (1:44)
The biggest US tech companies are expected to spend more than 700 billion dollars on AI this year. How much of that is flowing through companies like TSMC?

**Joanne Chow** (1:55)
We all know that TSMC will be a lot of benefit from the investment, but it's hard to make that as a number.

**Bissi Adebayo** (2:02)
Is there a risk really that the AI market could be becoming too dependent on one company to make the world's most advanced chips?

**Joanne Chow** (2:11)
I think all of the customer already, they don't want to put all of the orders in just one company. So of course, Samsung and Intel are also trying to make some advanced chips. And I think Intel already, they are making the CPU for also server and also AI servers. But we know TSMC is the biggest one and they make most of the chips.

**Bissi Adebayo** (2:31)
Despite the tariffs, trade tensions and geopolitical uncertainty, demand for AI chips remains incredibly strong. So has AI become largely immune to those headwinds?

**Joanne Chow** (2:44)
The geopolitical risk is still happening. I think that's also one of the reasons why TSMC need to enlarge their investment amounts in Arizona.
And also we still see supply chains moving, like back to China or out of China, because of the AI demand is too strong.

**Bissi Adebayo** (3:05)
Joanne Chow from TrendForce there. Well, the latest figures from the United States suggest consumers are still spending despite ongoing economic uncertainty and the impact of tariffs. Retail sales rose in June, helped by strong online shopping, while few Americans than expected filed for unemployment benefits pointing to a resilient labor market. I spoke to Samira Hussain, our business correspondent in New York.

**Samira Hussain** (3:29)
Even though these retail sales are coming in lower compared to last month, we're still seeing the consumers are spending. And if you take out things like petrol, well, we saw that retail sales actually went up by 0.7% in that one month period. And we saw that people were purchasing some bigger ticket items like new vehicles. And then also Amazon Prime Day, that's always a big moneymaker.

**Bissi Adebayo** (3:59)
And it's been a very busy period in the United States. We're talking, you know, the US hosting the FIFA World Cup.
It recently celebrates its 250th anniversary. So how much of all of these are being factored in the numbers?

**Samira Hussain** (4:12)
It certainly is having an impact, but some cities, of course, are going to be feeling more of the impact than others. So with regards to the World Cup, if you're not one of the host cities, you're not seeing a lot of that revenue coming in.

**Bissi Adebayo** (4:26)
Samira Hussain in New York. Let's talk about Nvidia now, because it hasn't failed a new AI model for robots as it expands its presence in Japan. Let's bring in Nicholas Hyatt, who is lead alternatives analyst at Hargrove's Lansdowne. Nicholas, is physical AI and robotics the next big opportunity for the company?

**Nicholas Hyatt** (4:46)
So far, AI models have all been about making office and research work and workers more efficient. Physical AI would move that revolution out of labs and offices and into factories and the service sector. I mean, that could be easier said than done, but it would be a massive opportunity for companies like Nvidia.