tsmc weathers smartphone slump with ai surge

2025-05-05 tsmc

Hsinchu, Monday, 5 May 2025.
taiwan semiconductor manufacturing is riding the ai wave. Demand for ai solutions remains high. This offsets a weaker smartphone market. Morgan Stanley analysts have taken note. They reinstated tsmc as a top pick, fueled by increased ai capital expenditure from tech giants like meta and microsoft. tsmc’s ai accelerator revenue is projected to double in 2025, with overall revenue expected to grow by approximately 25%. The company’s dominance in advanced packaging for ai chips is further solidified by plans to double capacity in 2025.

stock performance and analyst views

TSMC’s stock closed at $179.28 on a Friday, marking a 3.80% increase [4]. Despite experiencing a nearly 10% drop year-to-date, the stock has shown a substantial 26.65% gain year-over-year [4]. Morgan Stanley has given TSMC an overweight rating, indicating a potential for strong rebound driven by its central role in ai semiconductor growth [4]. However, Seaport Research Partners initiated coverage on Nvidia, a key customer of TSMC, with a sell rating and a $100 price target, citing valuation concerns and growing risks, which could indirectly impact TSMC [2].

manufacturing capacity and technological advancements

TSMC is actively expanding its manufacturing capabilities, with plans to invest $100 billion in the united states over the next few years [7]. This includes the construction of multiple fabs in Arizona, utilizing advanced process technologies such as n2 and a16 [5]. Volume production of n2 technology is expected to begin in the second half of 2025 [5]. The company’s focus on advanced packaging technologies like cowos is critical for high-performance computing applications in ai [5]. Tsmc is on track to double its advanced packaging capacity for ai chips in 2025 [6].

geopolitical considerations and market dynamics

Despite its strong position, TSMC faces geopolitical risks, particularly concerning potential tariff decisions [4]. The company is also navigating the complexities of the semiconductor market in China, where domestic players like Huawei and Cambricon hold a significant share of the ai chip market [6]. While us export bans have impacted Nvidia’s revenue in China, TSMC continues to adapt to evolving market dynamics [6]. Tsmc has clarified it is not engaged in any joint ventures involving technology licensing or transfer [5].

financial outlook and growth drivers

TSMC’s management maintains a positive outlook, projecting mid-20% revenue growth for the year [7]. Revenue from ai accelerators is expected to double in 2025 [5][6]. The company anticipates average annual revenue growth exceeding 20% over the next five years, while maintaining a gross margin above 53% [7]. High-performance computing, fueled by ai data center demand, is a significant growth driver, expanding at an 80% rate [5]. The price of n2 wafers, ramping up later this year, is expected to be around $24000 to $25000 [5].

Bronnen

AI Demand Semiconductor Solutions