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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%.

 

TSMC Reports Record Quarterly Profit, Expects Strong Growth in Early 2025

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Taiwan Semiconductor Manufacturing Co (TSMC) has posted a record-breaking quarterly profit, reporting a 57% increase in net income to T$374.68 billion ($11.4 billion) for the quarter ending Dec. 31. This surge in profit aligns with the company’s bullish outlook for the future, as revenue jumped by 39% compared to the same period last year. TSMC has forecasted continued strong performance, with a revenue growth estimate of about 37% for the first quarter of 2025, projecting earnings between $25-25.8 billion. For the full year, TSMC expects revenue growth to be between 20% and 30%, driven largely by the demand for chips used in artificial intelligence (AI) processing.

While TSMC’s business is thriving, it faces challenges stemming from U.S. government restrictions on AI chip exports to China. The Biden administration recently announced further curbs on these exports, which could affect demand from clients. However, TSMC’s CEO, C.C. Wei, expressed confidence that the company could manage these restrictions, stating that they are currently applying for special permits for affected clients and anticipating approval. He also emphasized the company’s strong communication with both the current and incoming U.S. administrations.

TSMC’s growth is also supported by its ambitious expansion plans, including new fabs in the United States, Japan, Germany, and Taiwan. For 2025, TSMC has set its capital spending target between $38 billion and $42 billion, marking a potential 41% increase. The AI-driven boom has significantly boosted TSMC’s stock price, which surged 81% in 2024, outperforming the broader market’s 28.5% growth.

 

U.S. Finalizes $406 Million Chips Subsidy for Taiwan’s GlobalWafers

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The U.S. Commerce Department announced on Tuesday that it has finalized a $406 million government grant to Taiwan’s GlobalWafers to boost silicon wafer production in the United States. This investment is part of the U.S. government’s broader efforts to strengthen the domestic semiconductor supply chain.

Expansion of U.S. Production

The grant will fund projects in Texas and Missouri, aimed at establishing the first high-volume U.S. production of 300-mm silicon wafers, a critical component for advanced semiconductors. Additionally, the funds will support the expansion of silicon-on-insulator wafers production. These wafers are essential for the manufacture of cutting-edge chips, aligning with the Biden administration’s initiative to enhance the U.S. semiconductor industry.

GlobalWafers plans to invest nearly $4 billion to build new wafer manufacturing facilities in both states. This expansion is expected to create 1,700 construction jobs and 880 manufacturing jobs. The company’s move comes at a time when the U.S. is looking to reduce its dependence on foreign-made chips and strengthen its domestic production capabilities.

Strategic Localization Amid Global Supply Chain Challenges

CEO Doris Hsu of GlobalWafers expressed the strategic importance of localizing production, especially given the current global semiconductor supply chain challenges. She highlighted that local supply in high-demand regions, like the U.S., will be prioritized, as it is more likely to be supported by local customers.

Hsu also acknowledged the potential uncertainties regarding the U.S. CHIPS Act with the incoming Trump administration, which will take office next month. However, she expressed confidence in the continuation of the initiative, noting that the CHIPS Act had its origins during Trump’s first term. While the company is legally protected by contracts, Hsu pointed out that tariffs and potential new policies could still affect the company’s operations and supply chain.

Global Wafer Production and U.S. Investment

GlobalWafers’ decision to invest in the U.S. aligns with its broader strategy to address the growing demand for semiconductors. In 2022, the company announced plans to build a $5 billion plant in Texas to produce 300-mm silicon wafers, a shift from its original plan to invest in Germany.

Currently, five major companies, including GlobalWafers, control over 80% of the global market for 300-mm silicon wafers, with the majority of production still concentrated in East Asia. The company is expanding its presence in the U.S. with a new plant in Sherman, Texas, to manufacture wafers for advanced, mature-node, and memory chips, as well as a new facility in St. Peters, Missouri, to produce wafers for defense and aerospace applications.

Urgency to Finalize CHIPS Act Awards

The U.S. Commerce Department is working swiftly to finalize grants under the CHIPS and Science Act, a semiconductor manufacturing and research subsidy program that was approved in 2022 with a budget of $52.7 billion. The department aims to complete these awards before Trump’s inauguration on January 20.