TSMC's Fourth-Quarter Profit Expected to Skyrocket Due to AI Chip Demand

By Wen-Yee Lee and Faith Hung

TAIPEI - Taiwan Semiconductor Manufacturing Co (TSMC), the leading global manufacturer of advanced chips for artificial intelligence applications, is projected to see a remarkable 58% increase in its fourth-quarter profit. This surge is mainly attributed to the growing demand for AI technology.

As the world's largest contract chipmaker, TSMC serves notable clients like Apple and Nvidia. The company has successfully capitalized on the widespread adoption of AI, which has significantly driven its growth. However, TSMC is also dealing with challenges such as U.S. government restrictions on technology exports to China and uncertainties regarding the new administration under President-elect Donald Trump, who has proposed sweeping import tariffs.

According to an analysis by 22 experts, TSMC is expected to announce a net profit of T$377.95 billion (approximately $11.41 billion) for the quarter ending December 31. This marks a contrast to the T$238.7 billion profit reported for the same period in 2023.

The company recently shared news of its revenue growth in Taiwan dollars for the fourth quarter, outpacing market predictions. TSMC is set to reveal its revenue guidance in U.S. dollars during its quarterly earnings call scheduled for 0600 GMT on Thursday.

Brett Simpson, co-founder and senior analyst at Arete Research, noted that the growth momentum of TSMC in 2025 will heavily rely on its AI customers. He expressed optimism that TSMC will forge strong relationships with the new U.S. administration, especially with its investment in new manufacturing facilities in Arizona, which represents the largest foreign direct investment project in the U.S. at present.

TSMC is allocating substantial resources to establish new factories outside Taiwan, including a massive investment of $65 billion in three plants located in Arizona. Despite this expansion, the company indicates that the majority of its manufacturing will continue to take place in Taiwan.

Edward Chen, chairman of Fubon Financial's investment sector, highlighted that the progress and yield rates at the Arizona facility will be crucial indicators for TSMC's future performance. He mentioned that the potential tariffs imposed by the incoming Trump administration could also affect demand.

During the upcoming earnings call, TSMC will provide updates on its forecasts for the current quarter as well as the full year, including its planned capital expenditures to enhance production.

In its previous earnings call in October, TSMC indicated that its capital expenses for 2025 would likely exceed those of the previous year, though a specific figure was not disclosed. For 2024, the company projected capital expenses to be slightly above $30 billion.

Thanks to the AI boom, TSMC's stock, listed in Taiwan, has skyrocketed by 81% last year, a significant increase compared to the broader market's gain of 28.5%. The increasing demand for AI technologies continues to play a crucial role in TSMC's promising financial outlook.

($1 = 33.1280 Taiwan dollars)

TSMC, profit, AI