asml and tsmc: the hidden drivers of ai growth
Taipei, Wednesday, 25 December 2024.
The semiconductor industry is witnessing unprecedented growth, fueled by the rise of artificial intelligence. In 2024, AI-driven demand pushed semiconductor sales to a record $627 billion, marking a 19% increase over the previous year. ASML and TSMC stand at the forefront of this boom. ASML’s extreme ultraviolet lithography technology is crucial for manufacturing the complex chips needed for AI, while TSMC’s production capabilities make it a leader in semiconductor supply. TSMC’s advanced three-nanometer chips, essential for AI and cloud computing, now constitute a significant portion of its sales. Despite geopolitical challenges, ASML’s long-term growth prospects remain strong, with revenue expected to rise significantly by 2030. TSMC’s dominance is further highlighted by its production of 95% of the world’s advanced AI chips. As the AI market is projected to grow dramatically by 2030, both companies are well-positioned to capitalize on this trend.
Market performance and financial outlook
TSMC’s stock has demonstrated remarkable performance with a 90% increase in 2024 through December 20 [1]. The company’s year-to-date sales through November 2024 show a 32% growth from 2023, with Q4 revenue projected to reach $26.1 billion, up from $19.6 billion the previous year [1]. ASML faces temporary headwinds, with shares down 7% in 2024 [1]. However, the company maintains strong growth projections, expecting 2024 sales of €28 billion ($29 billion), with a target of €44 billion ($45.8 billion) by 2030 [1].
Strategic technological advantage
TSMC’s 3nm chip technology has become a crucial revenue driver, accounting for 20% of its $23.5 billion total sales in Q3 2024, a significant increase from 6% in the previous year [1]. The company’s technological leadership is reinforced by its collaboration with major industry players, as evidenced by Amazon Web Services’ plans to develop custom AI chips using TSMC’s 3nm technology [1]. TSMC’s dominance is underscored by its estimated 95% market share in advanced AI chip production [1].
Industry ecosystem and partnerships
The symbiotic relationship between ASML and TSMC continues to strengthen, with TSMC utilizing ASML’s EUV machines for manufacturing complex three-nanometer chips [1]. This partnership extends to other industry players, as demonstrated by Applied Materials receiving TSMC’s Excellent Performance Award for the 15th consecutive year [2]. The semiconductor industry’s growth trajectory aligns with AI market projections, which forecast an expansion from $136 billion in 2023 to $827 billion by 2030 [1].