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TSMC Posts Record Profit, Projects Strong Growth Amid AI Surge

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Taiwan Semiconductor Manufacturing Co. (TSMC) has reported a record quarterly profit, signaling robust demand for chips, particularly those used in artificial intelligence (AI) processing. The world’s largest contract chipmaker posted a 57% increase in net income, reaching T$374.68 billion ($11.4 billion) for the quarter ending December 31, 2024. This performance matched analyst expectations, with revenue climbing 39% year-on-year.

Looking ahead, TSMC is projecting significant revenue growth in the first quarter of 2025, with a forecast of approximately 37% growth, bringing in between $25 billion and $25.8 billion. For the full year, the company expects a revenue increase between 20% and 30%, driven by strong AI demand.

Despite a thriving business, TSMC faces challenges from U.S. technology restrictions targeting China. The Biden administration’s recent announcement of tighter controls on AI chip exports has raised concerns, although TSMC’s CEO, C.C. Wei, expressed confidence that these restrictions would be manageable. Wei noted that the company is applying for special permits for clients affected by these curbs and is optimistic about securing approval.

TSMC is also expanding its global footprint with ongoing construction of new fabrication plants (fabs) in the U.S., Japan, Germany, and Taiwan. The company expects its capital expenditure for 2025 to reach between $38 billion and $42 billion, a potential increase of 41%.

The AI boom has significantly boosted TSMC’s stock, making it Asia’s most valuable company. Its stock price surged 81% last year, outperforming the broader market, which saw a 28.5% gain. On Thursday, ahead of the earnings call, TSMC’s shares rose by 3.8%.

 

Intel’s $7.86 Billion U.S. Subsidy Deal Imposes Restrictions on Chip Unit Sale

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Intel Corporation has disclosed that its recent $7.86 billion subsidy deal with the U.S. government includes significant restrictions on selling stakes in its chip manufacturing unit, Intel Foundry, if it becomes an independent entity. The subsidy, part of the U.S. Commerce Department’s $39 billion initiative to boost domestic semiconductor production, aims to reduce reliance on foreign manufacturers like Taiwan Semiconductor Manufacturing Co.

Under the terms of the deal, Intel must retain at least 50.1% ownership of Intel Foundry if it is spun off as a privately held subsidiary. If the unit becomes publicly traded, Intel is prohibited from selling more than 35% of the company to a single shareholder without potentially breaching change-in-control provisions.

Intel’s Expansion Plans and Subsidy Compliance

The restrictions are tied to Intel’s ambitious $90 billion investment in domestic semiconductor facilities in states such as Arizona, New Mexico, Ohio, and Oregon. These projects are critical to the company’s strategy to enhance U.S.-based manufacturing of cutting-edge chips.

The U.S. Commerce Department confirmed that similar change-in-control conditions are being negotiated with all recipients of direct grants under the subsidy program. Any significant changes in the ownership structure of Intel Foundry would require prior approval from the Commerce Department.

Intel CEO Pat Gelsinger announced earlier this year plans to spin off the company’s chip manufacturing operations as a separate subsidiary and indicated openness to external investments. However, the subsidy terms could limit Intel’s flexibility in pursuing partnerships or raising additional capital for Intel Foundry.

Industry Context and Future Implications

The $39 billion subsidy initiative is part of a broader effort by the U.S. government to strengthen the domestic semiconductor industry, ensuring resilience against global supply chain disruptions. Other industry giants like Taiwan Semiconductor Manufacturing Co. are also benefiting from this program, signaling a shift toward reshoring critical technology production.

While Intel has not commented further on the subsidy’s restrictions, the provisions underscore the U.S. government’s emphasis on maintaining control and oversight of taxpayer-supported manufacturing initiatives.

As Intel continues its expansion projects, compliance with these restrictions will be pivotal to securing its role as a leader in U.S. chip manufacturing and leveraging the subsidy to achieve its long-term goals.

 

Intel Faces Uncertainty Amid Major Changes and Potential Takeover Talks

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Intel had a tumultuous week, stirring both excitement and concern on Wall Street about the company’s future. The chipmaker, which has lost over half its value in the last two years, saw its stock rise 11%, its best week since November. The surge followed major announcements, including the separation of its manufacturing division from its core business of designing and selling processors.

The week culminated with reports that Qualcomm had approached Intel about a potential takeover, which could become one of the largest deals in tech history. While it remains unclear if Intel has engaged in any formal discussions with Qualcomm, both companies have declined to comment.

Intel’s CEO Pat Gelsinger, who has faced numerous challenges since taking over in 2021, has expressed his intention to maintain Intel’s independence. He insists that the company’s manufacturing and design divisions are “better together” but revealed a new governance structure for the foundry business. This move is aimed at attracting outside capital and reassuring investors of Intel’s commitment to serious changes as it embarks on a complex revival plan.

Intel is tasked with addressing two significant hurdles: investing over $100 billion through 2029 to build chip factories in four U.S. states, while also making inroads into the booming AI market, currently dominated by competitors like Nvidia. Gelsinger has made a bold bet on Intel’s foundry business, hoping that increased domestic manufacturing will appeal to U.S. chipmakers concerned about reliance on Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.

Despite these efforts, Intel’s core business of producing processors for PCs, laptops, and servers continues to struggle, losing market share to competitors like Advanced Micro Devices (AMD) and facing steep revenue declines. Intel’s client computing and data center divisions have both seen significant drops in revenue, while its AI initiatives have yet to make a substantial impact.

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The separation of the foundry business is seen as a way to attract more external customers, as many companies are hesitant to partner with Intel due to concerns about intellectual property. Despite landing Amazon as a customer for a networking chip, meaningful sales from external clients are not expected until 2027. Intel’s foundry efforts face stiff competition from TSMC, which currently manufactures chips for companies like Nvidia, Apple, and Qualcomm.

The U.S. government has emerged as Intel’s most significant supporter. The Biden administration awarded the company $8.5 billion under the CHIPS Act to bolster domestic chip production, with the possibility of an additional $11 billion in loans. This financial backing aims to reduce U.S. dependence on foreign semiconductor manufacturers. Intel has also secured $3 billion in funding to build chips for military and intelligence agencies in a classified program.

Even as Intel navigates these challenges, analysts remain skeptical about its long-term prospects. Gelsinger’s decision to maintain Intel as a unified entity could lead to a future spin-off of the foundry division, according to some market experts. JPMorgan Chase analysts have suggested that separating the two businesses could ultimately lead to a more favorable outcome for Intel in the coming years.

Despite this week’s developments, Intel still faces a steep road ahead. Its PC and server chip divisions continue to experience declining revenues, and the company is struggling to compete in the AI chip market, which Nvidia currently dominates. With Intel’s main businesses under pressure and its foundry ambitions years away from delivering results, investors are left wondering if the chipmaker can regain its former dominance or if more drastic measures are needed.