TSMC Reports Strong Q4 Profit Amid Rising AI Demand

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, posted a stronger-than-expected Q4 profit, fueled by robust demand for AI-driven advanced chips. Net income surged 57% to T$374.68 billion ($11.60 billion), surpassing Bloomberg's estimate of T$369.84 billion. Revenue climbed 39% year-over-year to T$868.46 billion, bolstered by rising sales of TSMC’s cutting-edge 3-nanometer chips.

TSMC CFO Wendell Huang projected Q1 2025 revenue between $25 billion and $28 billion, citing seasonal softness in smartphone demand and AI investment. However, capacity utilization rates are expected to improve marginally in 2025.

Capital spending for 2025 is set to rise significantly to $38-$42 billion, compared to $29.8 billion in 2024, with 70% allocated to advanced process technologies—TSMC’s primary revenue source. This investment reflects the increasing demand for AI-driven chip production, supported by major clients like NVIDIA and Apple. TSMC CEO CC Wei forecast mid-20% revenue growth in dollar terms for 2025, emphasizing sustained AI demand as a key driver.

Despite these gains, TSMC faces challenges, including potential earnings pressure from stricter U.S. restrictions on advanced chip exports to China. The company was scrutinized in late 2024 following reports of its chips being linked to Huawei, a blacklisted Chinese tech firm.

As a bellwether for the semiconductor industry, TSMC’s performance underscores the broader growth of AI demand and its influence on the chipmaking sector. The company’s increased capital spending signals confidence in meeting future technological needs, despite geopolitical headwinds.