TSMC Raises Revenue Outlook on Strong Artificial Intelligence Demand

Taiwan Semiconductor Manufacturing Co., the world's largest producer of advanced chips, increased its full-year revenue forecast on Thursday, driven by a robust outlook for artificial intelligence spending. This announcement followed the company's report of record profits, which exceeded market expectations.

Credit: TSMC

The Taiwanese chipmaker now anticipates its 2025 revenue growth to be in the mid-30% range in U.S. dollar terms, up from approximately 30%. It also maintained its capital spending forecast for 2025 at up to USD 42 billion.

Credit: TSMC

Chief Executive Officer C.C. Wei stated, "AI demand actually continues to be very strong - more strong than we thought three months ago." Wei added, "We are also happy to see a continuous strong outlook from our customers."

"In addition, we directly receive very strong signals from our customers requesting the capacity to support their business. Thus, our conviction in the AI megatrend is strengthening," Wei commented during an earnings call.

In pre-market trade in New York, TSMC's U.S.-listed shares climbed 1.6%. This rise also boosted other U.S. semiconductor stocks, including prominent artificial intelligence leaders Nvidia and Advanced Micro Devices.

Taiwan Semiconductor Manufacturing Co. reported a 39.1% increase in its third-quarter net profit, benefiting from surging demand for advanced chips used in artificial intelligence applications. For July through Sept., net profit rose to TWD 452.3 billion, equivalent to USD 14.76 billion.

This figure surpassed the TWD 417.7 billion LSEG SmartEstimate, which was compiled from 20 analysts. SmartEstimates are weighted toward forecasts from analysts who consistently demonstrate higher accuracy.

The company's customers include iPhone maker Apple Inc., and it plans to be prudent in its business planning extending into 2026. Chief Executive Officer Wei affirmed, "We are still very comfortable that the demand on leading-edge semiconductors is real."

Wei further noted that TSMC must "work very hard to narrow the gap" between supply and demand, referring to capacity expansion. U.S. President Donald Trump's trade policies and threats of tariffs on semiconductors have introduced uncertainty for the global chip industry and TSMC.

Despite potential U.S. restrictions that could make the China market unavailable to the company, Wei asserted, "I still think the AI's growth will be very dramatic." TSMC previously announced plans for a USD 100 billion U.S. investment with Trump in March, on top of USD 65 billion pledged for three plants in the state of Arizona, one of which is up and running.

This investment is in addition to USD 65 billion pledged for three plants in the state of Arizona, with one already operational. The broader industry has seen a flurry of significant deals between artificial intelligence firms, such as OpenAI, and chipmakers like Nvidia, AMD, and Broadcom.

These collaborations aim to build data centre capacity exceeding USD 1 trillion. Nvidia, AMD, and Broadcom all rely on TSMC for their chip production.

Concerns about a potential market bubble, reminiscent of the dot-com boom, have emerged due to multi-billion dollar investment announcements. Securities investors are closely monitoring for signs that demand might be tapering off.

However, recent company announcements suggest resilient demand. The head of Australia's Macquarie Asset Management (MAM) stated on Thursday that the sale of its Aligned Data Centres business for USD 40 billion was not an indication that the global data centre boom had peaked.

Additionally, ABB reported a substantial increase in orders in the United States during the third quarter, largely attributable to demand from data centres being constructed for artificial intelligence.

In related news, Samsung Electronics said on Tuesday it expected its largest quarterly profit in over three years, also attributing this to the artificial intelligence boom. ASML, a major customer for TSMC, announced on Wednesday that its third-quarter bookings exceeded market forecasts, but that it expected a significant fall in demand from China next year.

However, ASML anticipates a significant decrease in demand from China next year. Taiwan-listed shares in TSMC have increased by 38% this year, outpacing the broader market's 20% rise and largely dismissing tariff concerns.

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• TSMC raised its full-year revenue forecast due to strong artificial intelligence demand.

• The company reported a third-quarter net profit of USD 14.76 billion, exceeding market estimates.

• TSMC increased its 2025 revenue growth projection to mid-30% and maintained its USD 42 billion capital spending forecast.

Source: REUTERS