TSMC Expects 58% Profit Increase in Fourth Quarter Driven by AI Chip Demand

By Wen-Yee Lee and Faith Hung

TAIPEI - Taiwan Semiconductor Manufacturing Co (TSMC), the leading global supplier of advanced chips crucial for artificial intelligence (AI) applications, is expected to announce a remarkable 58% increase in its profit for the fourth quarter. This forecast is due to the increasing demand for AI technology.

As the largest contract chipmaker worldwide, TSMC serves high-profile clients such as Apple and Nvidia. The company is benefiting significantly from the growing trend toward AI-driven technologies. However, TSMC is also dealing with some challenges, such as U.S. government technology restrictions that affect their operations in China, as well as uncertainties surrounding the incoming administration led by President-elect Donald Trump, which has suggested the possibility of broad import tariffs.

According to a SmartEstimate from LSEG based on 22 analysts, TSMC anticipates a net profit of T$377.95 billion (approximately $11.41 billion) for the quarter ending December 31. This is a substantial increase from the T$238.7 billion profit reported in the same quarter of 2023.

Recently, TSMC highlighted a significant growth in fourth-quarter revenue in Taiwanese dollars, surpassing market expectations. The company is expected to provide its revenue guidance in U.S. dollars during its earnings call scheduled for 0600 GMT on Thursday.

Analyst Brett Simpson, a co-founder of Arete Research, noted that the growth of TSMC will continue to be driven by its AI customer base into 2025. He expressed optimism regarding TSMC's ability to establish a positive relationship with the new U.S. administration, especially considering that their new factory cluster in Arizona represents the largest foreign direct investment project currently in the U.S.

TSMC is investing substantial funds into new manufacturing facilities abroad, including plans to spend $65 billion on constructing three plants in Arizona, although the majority of production will still take place in Taiwan. Edward Chen, head of the securities investment unit at Fubon Financial, mentioned that the success of the Arizona facility and its chip yield rates will be pivotal for TSMC's future.

Moreover, the effect of potential tariffs from the new Trump administration on demand is yet to be determined, adding another layer of uncertainty for TSMC.

During its earnings call, TSMC will provide updates on its outlook for the current quarter as well as its financial projections for the year, including its planned capital expenditures aimed at expanding production capabilities.

In its last earnings call held in October, TSMC hinted that capital expenditures for 2025 might exceed those of the previous year but did not specify exact figures. For 2024, the company indicated that capital expenditures would likely be a little over $30 billion.

The ongoing AI boom has significantly contributed to a rise in the share price of TSMC, which is regarded as Asia's most valuable company, with its stock soaring 81% over the past year compared to a 28.5% increase in the broader market.

($1 = 33.1280 Taiwan dollars)

TSMC, Profit, AI