Taiwan Semiconductor Manufacturing Beats Estimates, Boosts AI Chip Sales
The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing (TSM), has reported impressive fourth-quarter earnings, exceeding analyst expectations. The company’s strong sales of advanced chips for artificial intelligence applications have driven its success.
Strong Demand for Advanced Technologies
TSM earned $2.24 per U.S. share on sales of $26.88 billion in the quarter ended December 31, surpassing analyst estimates of $2.20 per share on sales of $26.24 billion. On a year-over-year basis, TSMC’s earnings increased 53%, while sales rose 36%. The company’s customers, including top fabless semiconductor firms like Apple, AMD, Broadcom, Nvidia, and Qualcomm, have contributed to its growth.
Industry-Leading Technologies Drive Growth
“Our business in the fourth quarter was supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies,” said Chief Financial Officer Wendell Huang. “Moving into the first quarter of 2025, we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.”
Guiding to 2025 Revenue Growth
TSMC has guided to 2025 revenue growth in the mid-20s percentage range, exceeding the consensus estimate of analysts, which had been for sales growth of 22% this year. The company’s capital budget for 2025 is expected to be between $38 billion and $42 billion, up from slightly less than $30 billion in 2024.
Makers of Semiconductor Equipment Rise
The news has boosted makers of semiconductor equipment, such as ASML, Applied Materials, KLA, and Lam Research, which have seen their stocks rise. In the fourth quarter, shipments of 3-nanometer chips accounted for 26% of TSMC’s total wafer revenue, while 5-nanometer accounted for 34%, and 7-nanometer made up 14%.
Advanced Technologies Dominate Revenue
Advanced technologies, defined as 7-nanometer and smaller nodes, accounted for 74% of total wafer revenue. Bernstein Research analyst Mark Li has reiterated his outperform rating on TSM stock, citing the company’s strong AI revenue growth and reaffirmed AI demand exceeding capacity.
TSM Stock Performance
TSM stock has jumped more than 4% to 215.22 in premarket trades, staying above its 50-day moving average line, a key support level. The stock is on three IBD stock lists: IBD 50, Global Leaders, and Tech Leaders.
Leave a Reply