tsmc profits soar 60% amid trump trade turbulence
Taipei, Thursday, 17 April 2025.
Taiwan Semiconductor Manufacturing Co. saw profits jump 60% in the first quarter, fueled by high demand for AI chips. Net income reached NT$361.56 billion, a significant increase from last year. Advanced technologies accounted for 73% of total wafer revenue. The surge could face headwinds from potential trade policy shifts under a returning trump administration. These policies could include tariffs and export controls. In response, TSMC is investing billions in U.S. facilities, with plans to produce cutting-edge chips in Arizona.
financial performance
TSMC’s first-quarter revenue reached NT$839.25 billion, a 41.6 percent increase year-over-year [1]. This exceeded expectations of NT$835.13 billion [1]. The company’s success is attributed to the ongoing robust demand for AI chips [1]. TSMC’s position as a key manufacturer for companies like Nvidia and AMD has fueled its growth [1]. These firms rely on TSMC’s advanced processors [1]. Looking ahead, management’s guidance for the second quarter of 2025 will be closely watched by investors [8].
impact of geopolitical tensions
Potential trade policy changes under a Trump administration pose a significant challenge [1]. These include broad tariffs on Taiwan and stricter export controls on TSMC’s clients [1]. Taiwan currently faces a 10% tariff, which could rise to 32% without a U.S. trade deal [1]. Semiconductor export controls may expand, further restricting sales for chipmakers using TSMC foundries [1]. These geopolitical factors contribute to investor caution and affect TSMC’s stock valuation [3].
strategic investments in the u.s.
To mitigate trade risks and diversify its supply chain, TSMC is making substantial investments in the U.S. [1]. The company plans to invest an additional $100 billion in the U.S., supplementing its existing $65 billion commitment to three plants [1]. AMD will soon manufacture chips at TSMC’s Arizona facility, marking the first time AMD chips are made in the U.S. [1]. Nvidia has also begun production of its Blackwell chips at TSMC’s Arizona plants [1]. These moves signify a strategic shift towards U.S.-based manufacturing [1].
analyst perspectives on tsmc stock
Analysts view TSMC as significantly undervalued, particularly given its long-term growth prospects in the AI sector [3]. As of mid-April 2025, TSMC’s American depositary receipts (ADR) traded around $150-$155 [3]. Despite recent stock declines, with shares down over 20% year-to-date, the average one-year price target from analysts stands at $226.74, suggesting a potential 44% increase [1][8]. Nine out of 18 analysts have assigned a ‘strong buy’ recommendation to TSMC’s U.S.-listed ADR [8].
challenges and negotiations
TSMC is engaged in complex negotiations with the U.S. government regarding chip manufacturing subsidies [6]. Concerns exist over potential U.S. requirements to share profits and provide detailed operational information [6]. TSMC’s chairman has publicly expressed reservations about some of the U.S. conditions [6]. These negotiations and the broader geopolitical landscape add uncertainty to TSMC’s future prospects [6]. The company’s capital expenditure for the year is projected to be between $32 billion and $36 billion [6].