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TSMC Fourth-Quarter Profit Expected to Jump 58% Due to AI Chip Demand Surge

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Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading producer of advanced chips for artificial intelligence (AI) applications, is set to report a 58% increase in fourth-quarter profit, driven by strong demand in the AI sector. The company, which counts Apple and Nvidia among its clients, is benefiting from the AI megatrend but faces challenges such as U.S. government technology restrictions on China and potential tariffs under President-elect Donald Trump’s administration.

Analysts estimate that TSMC will post a net profit of T$377.95 billion ($11.41 billion) for the quarter ending December 31, compared to T$238.7 billion in the same period the previous year. This projection follows TSMC’s recent revenue report, which exceeded market expectations. The company will release its revenue outlook in U.S. dollars during its quarterly earnings call on Thursday.

Arete Research analyst Brett Simpson believes TSMC’s growth in 2025 will continue to be driven by AI customers. He is optimistic that TSMC can establish a strong relationship with the incoming U.S. administration, especially given its $65 billion investment in three plants in Arizona. TSMC’s overseas expansion, however, is not expected to diminish its Taiwanese manufacturing base.

Fubon Financial’s Edward Chen noted that the company’s progress in Arizona, including chip yield rates, would be critical for its future performance. He also highlighted the uncertainty regarding how tariffs from the Trump administration may impact demand.

TSMC is expected to provide updates on its current quarter and full-year outlook during its earnings call, including capital expenditure plans. The company has already projected capital expenditure for 2024 to be slightly over $30 billion and indicated that 2025’s capital spending could surpass 2024 levels.

The AI boom has driven up TSMC’s stock, with the company’s shares soaring 81% last year, significantly outperforming the broader market’s 28.5% gain.

 

Taiwan’s Exclusion from US AI Export Curbs Seen as a Vote of Confidence

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Taiwan’s government expressed confidence on Wednesday after being excluded from the new U.S. restrictions on artificial intelligence (AI) chip and technology exports. The U.S. recently announced tighter controls on AI exports, aiming to maintain dominance in advanced computing technologies within the United States and among its allies.

Details of the New U.S. Export Curbs

The new U.S. regulations, introduced on Monday, limit the export of AI chips to most countries, while maintaining a block on exports to adversarial states such as China, Russia, Iran, and North Korea. However, Taiwan, along with other close U.S. allies, was granted “tier one” status, allowing unlimited access to U.S. AI technology.

Taiwan’s Confidence in Compliance

Taiwan’s Economy Ministry highlighted that the inclusion of the island in the “tier one” category should reassure both local and international stakeholders about the government’s control and adherence to international laws. The ministry emphasized that Taiwan had consistently invited U.S. officials and industry professionals to collaborate with local companies to ensure understanding and compliance with relevant regulations.

Taiwan’s Role in the Global Semiconductor Supply Chain

Taiwan is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key supplier of chips for AI leaders such as Nvidia. The Taiwanese government, mindful of pressure from Beijing—who claims the island as its territory—has established stringent export controls to China and has pledged to enforce U.S. restrictions. In 2023, TSMC halted shipments to the Chinese company Sophgo after one of its chips was found in a Huawei AI processor, which violated U.S. sanctions.

U.S.-China Tensions and Taiwan’s Strategic Position

As tensions continue between the U.S. and China, particularly over AI technologies and national security concerns, Taiwan’s role in the semiconductor supply chain becomes increasingly critical. The island’s exclusion from the U.S. export restrictions reflects its strategic importance and the trust placed in it by the U.S. and other Western nations.

 

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%.