TSMC Projects 58% Increase in Fourth-Quarter Profit Due to AI Chip Demand

By Wen-Yee Lee and Faith Hung

TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co., widely recognized as the leading global manufacturer of advanced chips for artificial intelligence (AI) applications, is anticipated to announce a remarkable 58% increase in its profits for the fourth quarter on Thursday, attributed to a significant rise in demand.

As the largest contract chipmaker in the world, TSMC serves high-profile clients including Apple and Nvidia. The company is capitalizing on the growing trend toward AI technology. However, it faces obstacles from U.S. government restrictions on technology sales to China, as well as uncertainties linked to the incoming administration of President-elect Donald Trump, who has suggested potential broad import tariffs.

According to a LSEG SmartEstimate based on analyses from 22 experts, TSMC is projected to report a net profit of T$377.95 billion ($11.41 billion) for the quarter ending December 31. This is a significant increase compared to last year’s net profit of T$238.7 billion.

Recently, TSMC reported a substantial rise in its fourth-quarter revenue in local currency, surpassing market expectations. The company is expected to provide its revenue guidance in U.S. dollars during the earnings call slated for 0600 GMT on Thursday.

Brett Simpson, co-founder and senior analyst at Arete Research, noted that the growth in 2025 will largely be fueled by AI-related customers. "From the U.S. government perspective, Arete is optimistic that TSMC can establish a solid relationship with the new administration, particularly given the new manufacturing cluster in Arizona, which is one of the largest foreign direct investment projects in the U.S. at this moment," he stated.

TSMC is investing billions of dollars in new factories worldwide, with plans for $65 billion allocated for three facilities in Arizona. Nevertheless, the company has indicated that a majority of its production will continue to take place in Taiwan.

Edward Chen, chairman of Fubon Financial's securities investment division, highlighted that the progress of the Arizona factory and its chip yield rates would be crucial for TSMC's future. "Moreover, the effect of the forthcoming tariffs under the incoming Trump administration on demand is yet to be determined," he remarked.

During its earnings call, TSMC will update its outlook for the upcoming quarter and the full year, including its capital expenditure plans as it aims to expand production capabilities.

In its previous earnings call in October, TSMC indicated that capital expenditure for 2025 would likely exceed the previous year’s spending, without specifying the exact amount. It did, however, predict capital spending for 2024 to be slightly above $30 billion.

The booming AI market has significantly boosted the stock price of Asia's most valuable company, with TSMC's share price in Taipei surging by 81% in the past year, outperforming the broader market which gained 28.5% during the same period.

($1 = 33.1280 Taiwan dollars)

TSMC, AI, Profit