Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, is set to report a staggering 58% jump in fourth-quarter profit, fueled by the surging demand for AI chips. Analysts estimate that TSMC’s net profit for Q4 2024 will reach T$377.95 billion ($11.41 billion), significantly outperforming the T$238.7 billion it posted in the same period last year.
This impressive growth is driven by booming demand from tech giants like Apple and Nvidia, who rely on TSMC’s cutting-edge semiconductor technology to power AI applications. However, despite this success, uncertainty looms over the company’s future due to geopolitical factors, including U.S. restrictions on China and potential trade policies under the incoming Trump administration.
Revenue Beats Expectations Amid AI Boom
TSMC had already signaled its strong performance when it announced a substantial increase in Q4 revenue, surpassing market expectations. The AI revolution continues to fuel the company’s rapid growth, with experts predicting that 2025 will be another year dominated by AI-driven demand.
According to Brett Simpson, co-founder of Arete Research, TSMC’s AI business remains a key growth driver, especially as more companies integrate AI into their products and services. He also expressed optimism that TSMC’s $65 billion investment in U.S. chip plants—particularly its Arizona fab cluster—could help the company build strong ties with the new administration.
TSMC’s U.S. Expansion and Trade Policy Uncertainty
TSMC is heavily investing in expanding its manufacturing footprint outside Taiwan. The company is pouring billions into new semiconductor fabs in the United States, including a massive $65 billion investment in Arizona. However, it still maintains that the bulk of its production will remain in Taiwan.
Despite this expansion, trade policies under President-elect Donald Trump remain a wildcard. The possibility of higher tariffs on semiconductor imports could impact TSMC’s profitability and long-term strategies. Edward Chen, chairman of Fubon Financial’s securities investment unit, stressed that the Arizona fab’s production yield rates will be crucial for TSMC’s success.
TSMC’s Capital Expenditure Plans for 2025
During its upcoming earnings call at 0600 GMT on Thursday, TSMC is expected to provide updates on its capital expenditure plans and future outlook. Previously, the company had projected 2024 capital expenditure to be slightly over $30 billion, with expectations that spending in 2025 will be even higher.
Given the rapid growth in AI chip demand, TSMC is racing to expand production capacity and maintain its leadership position in the semiconductor industry.
Stock Performance and Future Outlook
Investors have taken notice of TSMC’s strong financial performance. In 2023, its stock price surged by 81%, significantly outperforming the broader Taiwanese market, which gained 28.5%.
With AI-driven demand continuing to accelerate, TSMC remains a dominant force in the semiconductor industry. However, regulatory challenges, geopolitical risks, and competition will shape its trajectory in 2025 and beyond.
As TSMC prepares to release its full earnings report, all eyes will be on how the company plans to navigate these uncertainties while capitalizing on the AI boom.
