tsmc earnings surge driven by AI demand
Hsinchu, Sunday, 19 January 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing significant earnings growth fueled by the booming AI sector. The company’s strategic focus on semiconductor manufacturing for AI technologies has resulted in a surge of demand for its chips. Collaborations with tech giants like Apple and NVIDIA ensure TSMC’s leadership in the market. Recent earnings showed a notable uptick, underscoring TSMC’s ability to meet the demands of AI developers and tech firms investing in AI infrastructure. As AI technology continues to integrate into various sectors, TSMC’s role becomes essential, supporting its strong market position and promising future prospects.
Record-breaking quarterly performance
TSMC’s fourth quarter results exceeded market expectations with remarkable financial metrics. The company reported a net profit of 374.7 billion New Taiwan dollars, marking a 57% increase year-over-year [1]. Revenue reached 868.46 billion New Taiwan dollars, showing a 39% growth, while operating profit surged by 64% to 425.71 billion New Taiwan dollars [1]. The company’s gross margin improved to an impressive 59% [1].
AI-driven growth projections
The semiconductor giant has raised its long-term revenue growth targets, reflecting confidence in AI-related demand. TSMC now projects a compound annual growth rate approaching 20% for 2024-2029, up from its previous 15-20% forecast [1]. The company expects its AI-related revenue to double in 2025, with a projected 40% compound annual growth rate over the next five years [1]. Advanced packaging revenue is anticipated to exceed 10% of total revenue by 2025 [1].
Market analysts’ optimistic outlook
Major financial institutions have expressed strong confidence in TSMC’s future performance. Goldman Sachs maintained its ‘buy’ rating, setting a 12-month target price of 1,400 New Taiwan dollars [1]. JPMorgan projects even higher potential, targeting 1,500 New Taiwan dollars and highlighting TSMC’s relatively modest price-to-earnings ratio of 25 [1]. Both firms cite TSMC’s near-monopoly in AI accelerator manufacturing, with market share approaching 100% through 2026 [1].
Strategic expansion and future catalysts
TSMC is poised for strategic growth with its expansion into international markets. The company is preparing to launch its Arizona fabrication plant, with analysts expecting announcements about increased U.S. production capacity in the coming months [1]. JPMorgan anticipates potential gross margin improvements to 60% within 2-3 quarters, driven by improved N7 utilization rates and strong momentum in N3/N5 processes [1][2].