TSMC's Q4 Profit to Soar 58% on AI Chip Demand: Reuters

Taiwan Semiconductor Manufacturing Co (TSMC), the world's leading producer of advanced chips used in AI applications, is expected to report a substantial surge in fourth-quarter profit, as reported by Reuters. The company's earnings call, scheduled for Thursday, will reveal the results.

Analysts surveyed by LSEG predict a 58% jump in profit for the quarter ended December 31, reaching T$377.95 billion ($11.41 billion). This represents a significant increase from the T$238.7 billion net profit recorded in the same period of 2023.

The report attributes this expected growth primarily to the booming demand for AI chips, a megatrend that has benefited TSMC, whose clientele includes major technology companies like Apple and Nvidia. However, the company faces headwinds from US government technology restrictions on China and uncertainty surrounding President-elect Donald Trump's incoming administration.

Brett Simpson, co-founder and senior analyst at Arete Research, expects AI to continue driving TSMC's growth in 2025. "From the U.S. government perspective, Arete is optimistic that TSMC can build a good relationship with the new administration particularly given its new fab cluster in Arizona is the biggest foreign direct investment project in the U.S. at present," Simpson stated.

While TSMC's recent report revealed a strong increase in fourth-quarter revenue in Taiwan dollars, exceeding market expectations, the company's earnings call will provide further details on its outlook, including revenue projections in US dollars and planned capital expenditure. The company has been investing billions of dollars in new factories overseas, including $65 billion on three plants in Arizona.

Edward Chen, chairman of Fubon Financial's securities investment unit, highlighted the importance of the Arizona fab's progress and yield rates for TSMC's future success. However, he also noted the potential impact of tariffs imposed by the incoming Trump administration as a source of uncertainty.

"Additionally, the impact of tariffs to be imposed by the incoming Trump administration on demand remains to be seen," Chen added.

The AI boom has significantly boosted TSMC's stock price, with its Taipei-listed shares soaring 81% last year, outperforming the broader market's 28.5% gain. The company's earnings call will provide further insights into its outlook for the current quarter and full year, including planned capital expenditure as it races to expand production.