tsmc profit soars with ai chip boom
Taipei, Thursday, 16 January 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) has announced a remarkable 57% rise in net profit for the fourth quarter of 2024. This surge is largely due to the increasing demand for AI chips, reinforcing TSMC’s position as the world’s leading contract chip manufacturer. The company reported net revenue of NT$868.46 billion ($26.36 billion), surpassing expectations, and a net income of NT$374.68 billion. High-performance computing, including AI and 5G applications, accounted for over half of the fourth-quarter revenue. TSMC’s annual revenue hit a record NT$2.9 trillion in 2024. The firm anticipates its AI accelerator revenue will double in 2025, even with potential challenges from U.S. export controls. TSMC shares rose by 81% in 2024 and continue to show growth. Analysts forecast that 2025 will be another strong year for TSMC, driven by sustained AI demand and strategic investments in advanced technology.
Record-breaking performance metrics
The semiconductor giant’s fourth-quarter results showcase exceptional growth across key metrics. Revenue rose 38.8% year-over-year [1], while the high-performance computing division, which includes AI and 5G applications, contributed 53% of Q4 revenue [1]. TSMC’s CFO Wendell Huang noted that AI accelerator products accounted for nearly 15% of total revenue in 2024 [1]. The company’s December revenue reached NT$278.16 billion, marking a dramatic 57.8% increase from the previous year [3].
Strategic expansion and market outlook
TSMC’s Arizona facility has begun producing 4-nanometer chips [3], marking its first large-scale advanced chip manufacturing in the United States. The facility is expected to reach mass production by early 2025 [2]. Citigroup analysts predict NVIDIA could become TSMC’s largest AI revenue source in 2025, potentially contributing up to 20% of revenue [2]. Despite concerns about overbuilding and power shortages potentially constraining AI development, TSMC’s gross margins are expected to reach new highs [2].
Investment and future projections
The company’s capital expenditure is projected to reach between $34-38 billion in 2025 [2], reflecting confidence in future demand. Morgan Stanley analysts, while maintaining an optimistic outlook, predict a slight 5% revenue decline in Q1 2025 due to seasonal iPhone demand fluctuations [2]. However, Brady Wang from Counterpoint Research emphasizes that surging AI chip demand has exceeded expectations [1], suggesting sustained growth potential despite short-term fluctuations.