Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year.
The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion.
The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development.
Photo: Chiang Ying-ying, AP
Growth accelerated for TSMC last month, capping 34 percent revenue growth for last year. That compares with TSMC’s official target of a 30 percent annual rise, although that outlook was expressed in US dollar terms. The world’s largest maker of advanced chips has been one of the biggest beneficiaries of a global race to develop AI.
TSMC’s market value nearly doubled last year, and it now trades in the US at a valuation close to US$1.1 trillion. However, some investors worry about when the AI boom would peter out. While TSMC’s revenue beat, it was just 1.6 percent higher than the average projection and fell short of the most bullish analyst expectations.
More bearish market observers point to potential over-building, bottlenecks to development such as power shortages, and the persistent absence of a killer AI app or service that would use up all of that server capacity.
The company’s gross margin is likely to expand to a two-year high of 58 percent or more, Bloomberg analyst Charles Shum said.
Four areas merit attention, Shum said.
First, the outlook for chip-on-wafer-on-substrate advanced-packaging capacity build and revenue, which is likely to give insight into the expected strength for AI chip demand in the coming twelve to eighteen months, he said.
Second, progress on the US Arizona fab’s ramp-up, which is critical to meeting the onshoring chipmaking needs of Apple, Nvidia and others, he said.
Third, potential margin pressure from weaker demand in 7-nm, 16-nm and larger mature nodes, he said.
Finally, capital-spending plans this year, which would signal TSMC’s confidence in the uptake of its next-generation N2 node, he added.
The US has also erected a web of restrictions to curtail the flow of Nvidia’s most powerful chips to China, with uncertain longer-term ramifications for TSMC’s key customer.
Morgan Stanley expects TSMC to project annual sales growth of low-20 percent in dollar terms. “TSMC usually guides conservatively at the beginning of the year, and then over-delivers,” analyst Charlie Chan wrote, adding that the company raised its outlook for growth over the course of last year and might again be starting from a more conservative position at the start of a new year.
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‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
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