Taiwan Semiconductor Manufacturing Co (TSMC) is expected to report a 58% leap in fourth-quarter profit, driven by strong demand for artificial intelligence (AI) chips. The earnings report for the quarter ended December 31 is scheduled for release on Thursday.
TSMC anticipates 58% profit surge driven by AI demand
Analysts estimate that TSMC’s net profit will reach T$377.95 billion (approximately $11.41 billion), up from T$238.7 billion in the same quarter for 2023, according to LSEG SmartEstimate from 22 analysts. TSMC’s customers include major companies like Apple and Nvidia, who have contributed to the firm’s growth amid the ongoing AI megatrend.
Last week, TSMC reported a robust increase in its fourth-quarter revenue in Taiwan dollars, exceeding market expectations. During its upcoming quarterly earnings call, the company will provide its revenue outlook in U.S. dollars, scheduled for 0600 GMT on Thursday.
Brett Simpson, co-founder and senior analyst at Arete Research, noted that TSMC’s growth will largely continue to be driven by its AI customers in 2025. He expressed optimism regarding potential good relations with the incoming U.S. administration, particularly because TSMC’s new fabrication plant cluster in Arizona represents the largest foreign direct investment project in the U.S. currently.
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TSMC has been heavily investing in new factories, committing $65 billion to three plants in Arizona. However, the company has indicated that most of its manufacturing operations will remain in Taiwan. Edward Chen, chairman of Fubon Financial’s securities investment unit, emphasized the importance of yield rates from the Arizona fab for the company’s success.
The impact of potential tariffs under the incoming Trump administration on demand for TSMC products is still undetermined. TSMC will provide updates on its outlook for the current quarter and the full year during its earnings call, as well as plans for capital expenditure. In its last earnings call in October, TSMC suggested that its capital expenditure for 2024 would be slightly higher than $30 billion and anticipated an increase for 2025 compared to last year.
The AI boom has spurred significant growth in TSMC’s share price, with stock trading in Taipei soaring by 81% last year, while the broader market gained 28.5% in the same period.
TSMC also reported December revenue of NT$278.16 billion ($8.4 billion), marking an increase of 0.8% from November and a surge of 57.8% year-on-year. For the calendar year 2024, TSMC’s total revenue was NT$2,894.31 billion ($87.4 billion), a growth of 33.9% compared to 2023. Analysts attribute this revenue increase primarily to the rising demand for AI hardware, which necessitates the advanced manufacturing capabilities of TSMC.
Featured image credit: TSMC
