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TSMC Rides AI Wave to Surpass Forecasts Despite Trade Challenges

Word on the StreetThursday, Apr 17, 2025 5:00 am ET

1min read

Taiwan Semiconductor Manufacturing Company (TSMC) released its first-quarter results, which outperformed market predictions, driven by the surging demand for artificial intelligence (AI) chips. The company reported a year-on-year net profit increase of 60.3%, reaching NT$ 361.56 billion, exceeding the anticipated NT$ 354.14 billion. Moreover, the quarterly revenue grew 41.6% year-on-year to NT$ 839.25 billion, surpassing the forecast of NT$ 835.13 billion.

TSMC maintained its annual revenue growth forecast, citing the persistent expansion in AI-related product demand. The company's high-performance computing division, which includes applications for AI and 5G, accounted for 59% of the total revenue and saw a 7% increase from the previous quarter. Advanced technologies of 7 nanometers and below comprised 73% of the total wafer revenue, emphasizing TSMC's prowess in cutting-edge chip manufacturing.

Despite the external challenges posed by stringent trade policies from former U.S. President Donald Trump, TSMC plans to sustain its operational momentum. The company is actively investing in varied locations, with significant commitments in the United States: a promise to invest an additional $100 billion, building on the previous commitment to establish three factories with a $65 billion investment.

CEO C.C. Wei mentioned during the earnings call that while the smartphone sector showed seasonal fluctuations, it was balanced by the consistent demand for AI technologies. Looking ahead to the second half of 2025, TSMC anticipates robust growth spurred by 3-nanometer and 5-nanometer technologies.

Amid concerns over tariffs and trade restrictions, TSMC has strategically expanded its operations in the U.S., reflecting in collaborations with giants such as AMD and NVIDIA. AMD announced production commencement at TSMC's newly established Arizona facility, marking a pivotal milestone for U.S.-based chip manufacturing. Concurrently, NVIDIA has initiated production of its Blackwell chips at the same site, aiming to collaborate with partners to manufacture substantial AI infrastructure products.

Despite an impressive quarterly performance, TSMC's stock on the Taiwan exchange saw a slight dip. For the year, the stock has cumulatively dropped over 20%, highlighting the volatile nature of the semiconductor industry.

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