In addition to reporting a higher-than-expected profit on Thursday, Taiwan Semiconductor Manufacturing Co. stated that demand for artificial intelligence will help counteract the current period’s generally poor smartphone sales.
Nvidia is among the clients of the largest contract semiconductor manufacturer, whose fourth-quarter earnings increased 57% to NT$374.7 billion ($11.37 billion), or NT$14.45 per share. According to a FactSet survey, analysts anticipated earnings of NT$14.34 per share.
Last week, TSMC reported a 39% increase in revenue to NT$868.5 billion.
TSMC shares (TSM) (TW:2330) increased 4% in premarket trading. Over the past 12 months, the stock has increased by 83%.
Revenue from high-performance computing increased 58% in 2024, while sales of smartphone chips increased 23%. Digital consumer electronics, automobiles, and the internet of things all had slight increases in revenue of 2% to 4%.
It predicts a midpoint gross margin of 58% and first-quarter revenue between $25 billion and $25.8 billion, which is higher than FactSet’s $24.6 billion.
Ramp costs for 2-nanometer chips and chip-on-wafer-on-strategy with silicon interposer, which are used for AI and super-computing, as well as the dilution from the start of overseas factories in Kumamoto, Japan, and Arizona, are the main reasons for the decline from 59% in the fourth quarter.
Additionally, it stated that it anticipates spending between $38 billion and $42 billion on capital projects this year.
On a conference call, CFO Wendell Huang stated, “We are well positioned to capture the multi-year structural demand from the industry megatrends of 5G, AI, and [high-performance computing] in 2025.”
Taiwan Semi CEO CC Wei and JPMorgan analyst Gokul Hariharan had a noteworthy conversation. Hariharan backed out the calculations and predicted that the new Arizona factory will start with 10% profits.
In a transcript from S&P Global Market Intelligence, Hariharan stated, “I don’t think TSMC has ever started a fab at 10% gross margin,” while the chipmaker did not confirm or refute the figures. Wei answered, “Gokul, we are working hard to improve it.”
Wei added that its “very tight capacity” allows it to meet the demand for AI. “I’d rather not be the bottleneck. He claimed that TSMC always works really hard with clients to satisfy their needs.
