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TSMC Anticipates 58% Surge in Fourth-Quarter Profit Amid Strong AI Chip Demand

Taiwan Semiconductor Manufacturing Co (TSMC), a key global player in advanced chip production for artificial intelligence applications, is projected to unveil a significant 58% increase in fourth-quarter profit this Thursday, driven by a sharp rise in demand.


Taiwan Semiconductor Manufacturing Co (TSMC), a key global player in advanced chip production for artificial intelligence applications
Credit: TSMC

As the world's largest contract chipmaker with clients like Apple and Nvidia, TSMC has reaped the benefits of the growing trend towards AI technology. However, the company is facing challenges due to US government restrictions on technology exports to China and uncertainties surrounding the incoming administration of President-elect Donald Trump, who has hinted at imposing broad import tariffs.


Analysts predict that TSMC is set to achieve a net profit of T$377.95 billion ($11.41 billion) for the quarter ending on December 31, a substantial leap from the T$238.7 billion profit reported in the fourth quarter of 2023. The company's revenue in Taiwan dollars for the same period surpassed market expectations, setting a positive tone for its upcoming earnings announcement.


Brett Simpson, co-founder and senior analyst at Arete Research, foresees that TSMC's growth in 2025 will be predominantly fuelled by its AI clientele. He expressed optimism about TSMC fostering a strong relationship with the new US administration, especially with its significant investment in a fab cluster in Arizona, currently the largest foreign direct investment project in the country.


TSMC's strategic investments include allocating billions of dollars towards establishing new manufacturing facilities abroad, with a notable $65 billion earmarked for three plants in Arizona. Despite this, the company asserts that the majority of its manufacturing operations will remain in Taiwan.


Edward Chen, chairman of Fubon Financial's securities investment unit, highlighted the importance of progress on the Arizona fab and its yield rates in determining TSMC's future success. He also noted the uncertainty surrounding the impact of potential tariffs imposed by the incoming Trump administration on chip demand.


During its earnings call scheduled for 0600 GMT on Thursday, TSMC will provide updates on its outlook for the current quarter and the full year, including planned capital expenditure as it strives to expand its production capacity. In the previous earnings call in October, TSMC hinted at higher capital expenditure in 2025 compared to the previous year, without specifying a figure, while projecting slightly higher capital expenditure for 2024 than $30 billion.


The surge in demand for AI technology has propelled TSMC's stock price, with its Taipei-listed shares skyrocketing by 81% in the past year, outperforming the broader market's 28.5% gain.

 
  • TSMC anticipates a 58% increase in fourth-quarter profit driven by strong demand for AI chips.

  • Analysts project a net profit of T$377.95 billion for the quarter ending on December 31.

  • TSMC's growth in 2025 is expected to be primarily fuelled by AI customers.


Source: REUTERS

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