On July 28, 2023, the logo of Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) can be seen at the opening ceremony of the TSMC Global R&D Center in Hsinchu. (Photo by Amber Wang/AFP)
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Taiwan Semiconductor Manufacturing Co. beat expectations for fourth-quarter revenue and profit as demand for advanced chips used in artificial intelligence applications continues to surge.
Here's how TSMC's fourth-quarter results compared to the London Stock Exchange's consensus estimates:
TSMC’s profits increased by 57% year-on-year, reaching a record high, and revenue increased by 38.8%. The company expects fourth-quarter revenue to be between $26.1 billion and $26.9 billion.
As the world's largest contract chipmaker, TSMC produces advanced processors for customers such as Nvidia and Apple and has benefited from the larger trend in artificial intelligence.
TSMC's high-performance computing unit, which covers artificial intelligence and 5G applications, drove sales in the fourth quarter, contributing 53% of revenue. HPC revenue increased 19% from the previous quarter.
"The surge in demand for artificial intelligence chips in the fourth quarter exceeded expectations," Counterpoint Research associate director Brady Wang told CNBC, adding that demand for advanced chips in Apple's latest iPhone 16 models also boosted revenue.
The Taiwanese company announced its December revenue for the first time last week, bringing total revenue for the year to NT$2.9 trillion, setting a sales record since the company went public in 1994.
"We have observed strong customer demand for AI-related products in 2024," TSMC Chief Financial Officer and Vice President Wendell Huang said on Thursday's earnings call. He added that AI accelerator products accounted for "close to 15%". % of total revenue in 2024."
Huang added: "Even after more than tripling in 2024, we expect AI accelerator revenue to double in 2025 as AI-related demand continues to grow strongly, becoming a key enabler of AI applications."
However, TSMC may face some headwinds in 2025, including U.S. restrictions on exports of advanced semiconductors to China and uncertainty over President-elect Donald Trump's trade policies.
TSMC Chairman and CEO CC Wei said the company will not attend Trump's inauguration because the company's philosophy is to keep a low profile, Reuters reported.
Trump, who takes office next week, has threatened to impose widespread tariffs on imported products and has previously accused Taiwan of "stealing" the U.S. chip business. .
Nonetheless, Counterpoint's Wang predicts 2025 will be another strong year for TSMC, with strong and expanding demand from the diversity and volume of AI applications driving significant revenue growth.
TSMC's Taiwan-listed shares have risen 81% in 2024, rising 3.75% on Thursday.
Shares in European semiconductor companies traded higher on Euronext Amsterdam on Thursday, with ASML up 3.5%, ASM International up 3.75% iron up 5.1%.