TSMC’s sales beat estimates in a boost for AI’s outlook in 2025
The go-to chipmaker for Nvidia and Apple reported a 39% rise in October-December revenue to NT$868.5 billion
TAIWAN Semiconductor Manufacturing Co’s quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of AI hardware spending will extend into 2025.
The go-to chipmaker for Nvidia and Apple reported a 39 per cent rise in October-December revenue to NT$868.5 billion (S$36.08 billion), based on calculations off monthly disclosures. That compares with an average estimate of NT$854.7 billion.
The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft will continue to build and upgrade metacentres at a rapid clip to propel AI development. This month, AI server maker Hon Hai Precision Industry reported better-than-expected sales, while Microsoft outlined plans to spend US$80 billion this fiscal year on metacentres.
The world’s largest maker of advanced chips has been one of the biggest beneficiaries of a global race to develop artificial intelligence. Its shares have more than doubled since that boom took off in late 2022 with the debut of OpenAI’s ChatGPT. TSMC’s market capitalisation briefly crossed the US$1 trillion mark in the US.
Yet more bearish market observers point to potential over-building, bottlenecks to development such as power shortages, and the persistent absence of a killer AI app or service that will use up all that server capacity.
Beyond Nvidia and the AI arena, the Taiwanese company, which will report full results on Thursday, must grapple with mounting tech market and geopolitical uncertainties in 2025.
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TSMC remains reliant on Apple’s business, as the main producer of chips for the iPhone. The US company is struggling to galvanise demand for its marquee product in 2025, though many users hope that the gradual addition of AI features will drive the gadget’s next iteration.
The US has also erected a web of restrictions to curtail the flow of Nvidia’s most powerful chips to China, with uncertain longer-term ramifications for TSMC’s key customer.
Morgan Stanley expects TSMC’s first-quarter revenue to decline 5 per cent sequentially due to iPhone seasonality. It expects TSMC to project annual sales growth of low-20 per cent in dollar terms. “TSMC usually guides conservatively at the beginning of the year, and then over-delivers,” analyst Charlie Chan wrote.
Longer-term, TSMC is pursuing a rapid international expansion. It foresees capital expenditure rising in 2025 from roughly US$30 billion this year.
It’s planning more plants in Europe with a focus on the market for artificial intelligence chips, according to a senior Taiwanese official. That’s on top of construction underway in Japan, Arizona and Germany. BLOOMBERG
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