Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand.
The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday.
By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said.
Photo: Sam Yeh, AFP
“Almost all the AI innovators are working with TSMC to address the incessant AI-related demand for energy-efficient computing power,” Wei said. “We expect AI server processors to become the strongest driver of our high-performance computing product growth and the largest contributor to our overall revenue growth in the next few years.”
A surge in AI chip demand is fueling the firm’s advanced technologies, including 4-nanometer, 3-nanometer and 2-nanometer process technologies, as customers aim to address the critical issue of power consumption at data centers.
All AI chips being made by the chipmaker utilize its 5-nanometer or 4-nanometer technology, the company said.
AI technology is evolving to use ever-increasingly complex models, which need to be supported by more powerful hardware and the most advanced process technologies, TSMC said.
As a result, TSMC expects 3-nanometer chip revenue this year to triple from last year and is looking at a meaningful revenue contribution by 2-nanometer chips in the first quarter of 2026 following the start of volume production in the second half of next year.
A scarcity of advanced packaging capacity is also being caused by the AI boom. TSMC said the capacity of chip-on-wafer-on-substrate technology would remain tight this year even though it plans to more than double its capacity and leverage the capacity of its partners.
“Demand is extremely high. We have done our best to increase capacity to alleviate the shortage,” Wei said.
TSMC yesterday retained its revenue growth forecast at 20 to 25 percent for this year, and kept its capital expenditure unchanged at between US$28 billion and US$32 billion, but the chipmaker cut its revenue forecast for global semiconductor growth to 10 percent, compared with its earlier estimate of more than 10 percent, which it attributed to a lukewarm pickup in PC and smartphone demand.
Demand for chips used by automakers has also fallen short of expectations, the company said.
TSMC expects revenue this quarter to grow about 6 percent to between US$19.6 billion and US$20.4 billion, from US$18.87 billion last quarter, supported by strong demand for 3-nanometer and 5-nanometer technologies.
Gross margin is expected to drop to between 51 percent and 53 percent this quarter from 53.1 percent last quarter, factoring in the impact of higher electricity rates and the losses of some wafers and materials during the earthquake that rocked Taiwan on April 3.
TSMC’s net profit last quarter beat market expectations, expanding 8.9 percent to NT$225.49 billion (US$6.96 billion) from NT$238.71 billion a year earlier.
That was the best first-quarter profit in the chipmaker’s history and it translated into earnings per share of NT$8.70, up from NT$7.98 the previous year.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS