TSMC Posts Record Earnings Driven by Holiday Shopping and AI Chip Demand, With Robust Guidance

TSMC has reported another record quarter, attributed to the busy Christmas shopping season and the mass production of Nvidia's Blackwell B200 chip, setting a positive tone for the tech giants' Q4 earnings season.

Revenue reached $26.89 billion, a 37% year-on-year increase (39% in NT$) and a 14% quarter-on-quarter rise. This was at the top end of their previous guidance range of $26.1-$26.9 billion. Net income was $11.6 billion, up 55% year-on-year (57% in NT$).

The iPhone 16 series boosted consumer spending, alongside the start of Nvidia's B200 shipments and TSMC's high-end chip pricing power, resulting in a gross profit margin of 59% this quarter, up 6 percentage points from the same period last year. TSMC is capitalizing significantly from both Apple and Nvidia due to its dominance in high-end processes.

3+5+7nm Revenue Surpasses 70%, AiPhone Fuels North American Shopping Season, B200 Officially Ships

TSMC's 3nm chip revenue share increased to 26% this quarter, up 5 percentage points from the previous quarter, closely tied to the mass shipment of Apple's AI-powered iPhone 16 series. Since October, Apple has distributed the latest Apple Intelligence in Europe and America, further driving upgrades. To stimulate sales in China, where AI support is absent, Apple is offering discounts.

Most of Apple's product lines have transitioned to the 3nm process, while Nvidia has fully taken over TSMC's 5nm. Revenue from the 5nm rose to 34%, a 2-percentage-point increase from the previous quarter, driven by the official shipment of the B200 chip with the Blackwell architecture in Q4. Given the burgeoning demand for AI computing power and custom-made ASICs from companies like Broadcom, TSMC's high-end processes will remain in high demand.

Revenue from the 7nm decreased slightly to 14%. Overall, combined revenue from the 3+5+7nm surpassed 70% for the first time in history. With advances in consumer electronics and AI, TSMC's high-end processes are on track to aiming for 80%.

HPC and Smartphone Chip Revenue Contribute Nearly 80%, Growth Across Consumer and Enterprise Segments

During the shopping season and the AI trend, TSMC's high-performance computing (HPC) and smartphone demand both increased. HPC-related revenue contributed 53%, maintaining above 50% for three consecutive quarters, as AI and data center chips strengthened. Revenue from smartphones contributed 35%, a 1-percentage-point increase from the previous quarter.

Revenue from IoT devices and automotive chips were 5% and 4%, respectively, down by 2 and 1 percentage points quarter-on-quarter.

Q1 Revenue Expected to Decline Sequentially, but Annual Growth Expected to Exceed 25%

TSMC expects Q1 revenue between $25 billion and $25.8 billion, with a midpoint representing a 35% year-on-year increase, surpassing the $24.4 billion expectation, but a 6% quarter-on-quarter decrease due to the previous high shopping season base. The impact of the AiPhone replacement wave remains to be seen, along with continuing AI spending by major tech giants this year. Annual revenue growth is estimated in the mid-20% range. TSMC also plans to expand its technology and capacity with an estimated capital expenditure of $38-$42 billion for 2025, representing a 34% year-on-year increase at the midpoint.

Overall, TSMC's performance this quarter was impeccable. The AI wave, spanning from computing chips to consumer electronics, demands top-notch manufacturing processes, allowing TSMC to achieve both volume and price increases. This indicates that companies like Apple, Nvidia, and other tech giants will continue to perform well in their quarterly reports. This trend is expected to persist throughout the year, with no signs of a decline in AI demand and potential opportunities in quantum computing. TSMC will continue to strengthen its market position.