TSMC: AI Boom Drives Revenue Surge, Outpacing Market Expectations

Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading contract chipmaker, reported fourth-quarter revenue that exceeded market projections, driven by robust demand for artificial intelligence (AI) semiconductors. The company's performance underscores the rising influence of AI technologies, even as traditional consumer electronics markets face challenges.

TSMC announced Q4 revenue of TWD868.4bn ($26.3bn), surpassing analysts' estimates of TWD853.57bn ($25.88bn), according to data from LSEG. The figure marks a year-on-year (YoY) increase of 34.4% and aligns with TSMC's prior forecast of $26.1bn to $26.9bn for the quarter. December proved particularly strong, with revenue jumping 57.8% YoY to TWD278.16bn ($8.43bn). The company has attributed much of this growth to the surge in demand for AI-related chips, particularly those powering data centers and advanced computing systems. Nvidia, a key TSMC customer, has been a major driver of this trend with its high-performance AI GPUs.



Record revenue bolstered by AI chips
The pandemic-era boom in consumer electronics, which previously fuelled chip demand, has tapered off, leaving companies like TSMC to pivot towards new growth areas. AI has emerged as a critical market, with applications in cloud computing, autonomous systems, and machine learning pushing demand for advanced semiconductors. While the consumer electronics segment remains subdued, TSMC's strategic positioning as the supplier of cutting-edge chips has allowed it to benefit from the broader adoption of AI.

TSMC closed 2024 with an annual revenue of TWD2.9 trillion ($88bn), its highest since going public in 1994. The company's dominance in advanced chip production, alongside the AI boom, has driven its growth trajectory. Its shares on the Taiwan Stock Exchange surged by 81% last year, far outperforming the broader market's 28.5% gain. TSMC is not the only Taiwanese company benefiting from the AI surge. Foxconn, a contract electronics manufacturer and a key assembler of Nvidia's AI servers, also reported record fourth-quarter revenue this week. The company's results reflect the growing demand for AI-related hardware across multiple sectors.



Globally, investment in AI infrastructure continues to expand. Microsoft recently announced plans to invest $80bn by June in building data centers capable of handling AI workloads. This heightened focus on AI technology suggests sustained demand for advanced semiconductors, further benefiting chipmakers like TSMC. The company will release its full fourth-quarter earnings next week, providing additional insights into its performance and market outlook. The company is expected to update its projections for the current quarter and the full year, offering investors a clearer picture of the semiconductor market's trajectory in 2025.

Read more: TSMC wins $6.6bn in US government funding for chip production

In conclusion, TSMC's strong Q4 revenue, driven by AI chip demand, underscores the growing influence of AI technologies on the semiconductor market. As traditional consumer electronics markets face challenges, TSMC's strategic focus on AI and its leadership in advanced chip production have positioned it for sustained growth. With global investment in AI infrastructure expanding, TSMC is well-positioned to continue benefiting from the increasing demand for advanced semiconductors.