tsmc's revenue surges on ai demand boom
Hsinchu, Monday, 10 February 2025.
Leading chipmaker TSMC has posted impressive financial results for Q4 2024, reporting revenues of $26.8 billion, well above market predictions. This surge is attributed to a sharp increase in demand for AI applications and the use of advanced semiconductor processes. With a year-over-year revenue growth of 36.5% and a sequential growth of 14.1%, the company outperformed its previous guidance and Bloomberg’s consensus estimates by 3.9% and 1.3%, respectively. TSMC’s gross margin also rose to 59.0%, surpassing expectations. The demand for 3-nanometer and 5-nanometer chips played a significant role in driving revenue. AI remains a key contributor, accounting for over half of the revenue, highlighting the robust market appetite. As TSMC sets its sights on continued growth, the outlook for 2025 remains optimistic, poised for expansion in AI-driven and other markets.
Manufacturing capacity and advanced processes
TSMC’s 3-nanometer technology contributed 26% of fourth-quarter revenue, up from 20% in the previous quarter and 15% year-over-year [1]. The company has achieved higher capacity utilization rates in advanced processes (7nm and below), which accounted for 69% of wafer revenue in 2024, compared to 58% in 2023 [1]. Management projects 2025 capital expenditure to reach $38-42 billion, marking a significant increase from $29.8 billion in 2024 [1].
Strategic expansion in the US
TSMC’s Arizona facility began 4nm production in Q4 2024 [4]. The company is proceeding with plans for second and third fabs in Arizona, with the second facility scheduled to commence production in 2028, utilizing more advanced processes including 3nm, 2nm, and A16 technologies [4]. However, potential US tariffs proposed by Trump have raised concerns [4], leading TSMC to consider price increases of up to 15% to offset possible risks [4].
Future outlook and AI focus
Management maintains an optimistic outlook for 2025, forecasting approximately 25% revenue growth [1]. The company expects AI-related revenue to double from its 2024 level of 15% [1]. For Q1 2025, TSMC projects revenue between $25-25.8 billion, representing a 35% year-over-year increase [1]. The company’s long-term growth trajectory remains strong, with management targeting a 20% compound annual growth rate [1].