(Jan 16): Taiwan Semiconductor Manufacturing Co (TSMC) projected quarterly sales and capital expenditure ahead of analysts’ estimates, fuelling hopes that spending on artificial intelligence (AI) hardware should remain resilient in 2025.
The main chipmaker to Apple Inc and Nvidia Corp foresees spending US$38 billion (RM171.08 billion) to US$42 billion on technology and capacity this year, or up to 19% more than analysts anticipated. It predicted revenue of US$25 billion to US$25.8 billion in the March quarter, as much as 6% above projections. Shares in TSMC suppliers including Tokyo Electron Ltd and Advantest Corp spiked in Asia.
TSMC’s strong performance buoyed optimism around an unprecedented AI spending cycle that drove the likes of Nvidia to new heights. The advent of ChatGPT spurred a frenzied data centre build-out over the past two years, benefiting a host of companies that provide the piping and brains of the AI boom.
Still, the lack of a big profit-generating AI application so far stoked concerns about a potential bubble. And like much of the industry, TSMC is grappling with uncertainties stemming from a US-China tech conflict that threatens to disrupt supply chains and stem the flow of chips around the world. The US this month announced new export control rules on AI chips to curtail their supply to China.
Away from AI, TSMC remains heavily reliant on consumer electronics and smartphones, given that Apple remains its largest customer. iPhone sales have proven muted, though the industry expects mobile AI features to expand over time, driving the broader market.
On Thursday, chief executive officer CC Wei warned that smartphone unit growth will remain in the low single-digits in 2025. But he added that there would be mild recovery in segments other than AI.
The world’s biggest chipmaker reported a better-than-expected 57% rise in net income.
“For the driver, besides the ongoing robust AI chip demand, there will be support from new smartphone chips and AI PCs, possibly more outsourcing orders from Intel, and WiFi 7 chips,” Bloomberg Intelligence analyst Charles Shum said about the 2025 revenue outlook.
Investors monitor TSMC’s capex for clues not just to chip and electronics demand, but also on the pace of its international expansion. The 2025 projection given on Thursday represented a rise in spending of as much as 40% from 2024.
Geopolitical tensions have pushed TSMC to manufacture abroad. It is planning more plants in Europe with a focus on the market for AI chips, according to a senior Taiwanese official. That’s on top of a German plant under construction in Dresden.
On Thursday, executives affirmed that the factory it is building in Arizona — a cornerstone of Biden administration policy — will house cutting-edge technology in future. But they stopped short of outlining a specific timeline. The most advanced semiconductors would continue to be produced domestically, executives stressed.
For 2025, TSMC projected growth in the mid-20% range, roughly in line with analysts’ estimates. Executives emphasised that, despite a volatile smartphone arena, spending on AI will continue to drive growth.
Read also:
US blacklists Chinese companies over TSMC chips in Huawei processor
TSMC boss to skip Trump inauguration, unlike other tech CEOs
Uploaded by Tham Yek Lee