TSMC fourth-quarter profit beats expectations on strong AI chip demand

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TSMC fourth-quarter profit beats expectations on strong AI chip demand

A logo of Taiwan Semiconductor Manufacturing Company (TSMC) is seen during the TSMC global RnD Center opening ceremony in Hsinchu on July 28, 2023. (Photo by Amber Wang / AFP)

Amber Wang | Afp | Getty Images

Taiwan Semiconductor Manufacturing Company’s fourth-quarter

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beat expectations, as demand for advanced chips used in artificial intelligence applications continued to surge.

Here are TSMC’s fourth-quarter results versus LSEG consensus estimates:

• Net revenue: 868.46 billion New Taiwan dollars ($26.36 billion), vs. NT$850.08 billion expected
• Net income: NT$374.68 billion, vs. NT$366.61 billion expected

TSMC profit rose 57% from a year earlier to a record high, while revenue jumped 38.8%. The firm had forecast fourth-quarter revenue between $26.1 billion and $26.9 billion.

As the world’s largest contract chip manufacturer TSMC produces advanced processors for clients such as Nvidia and Apple and has benefited from the megatrend in favor of AI.

TSMC’s

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division, which encompasses artificial intelligence and 5G applications, drove sales in the fourth quarter, contributing 53% of revenue. That HPC revenue was up 19% from the previous quarter.

“The surging demand for AI chips has exceeded expectations in Q4,” Brady Wang, associate director at Counterpoint Research told CNBC, adding that revenue was also bolstered by demand for the advanced chips in Apple’s latest iPhone 16 model.

The Taiwan-based company first released its December revenue last week, bringing its annual total to NT$ 2.9 trillion — a record-breaking year in sales since the company went public in 1994.

“We observed robust AI related demand from our customers throughout 2024,” TSMC Chairman and CEO C.C. Wei said in an earnings call on Thursday, adding that revenue from AI accelerator products accounted for “close to a mid-teens percentage” of total revenue in 2024.

“Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025 as a strong surge in AI-related demand continues as a key enabler of AI applications,” Wei added.

However, TSMC may face some headwinds in 2025 from U.S. restrictions on advanced semiconductor shipments to China and uncertainty surrounding the trade policy of President-elect Donald Trump.

Wei said the company will not attend Trump’s inauguration as its philosophy is to keep a low profile, Reuters reported.

Trump, who will assume office next week, has threatened to impose broad tariffs on imports and has previously accused Taiwan of “stealing” the U.S. chip business.

Still, Counterpoint’s Wang forecasts 2025 to be another strong year for TSMC, with significant revenue growth fueled by strong and expanding demand for AI applications, both in diversity and volume.

Taiwan-listed shares of TSMC gained 81% in 2024 and were trading 3.75% higher on Thursday.

Stocks of European semiconductor companies trading on the Euronext Amsterdam Stock Exchange rose Thursday, with ASML up 3.5%, ASM International gaining 3.75% and Besi rising 5.1%.

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