Investing.com-- Taiwan Semiconductor Manufacturing Co, also known as TSMC, clocked a stronger-than-expected fourth quarter profit on Thursday, as it continued to benefit from strong artificial intelligence-fueled demand for its advanced chips.
The world's biggest contract chipmaker forecast a substantial increase in capital spending for 2025, citing a pick-up in capacity utilization and increased production at its new facilities in the U.S. and Japan.
TSMC's (TW:2330) (NYSE:TSM) net income surged 57% to T$374.68 billion ($11.60 billion) in the three months to Dec 31, the company said in a statement. The figure was higher than Bloomberg estimates of T$369.84 billion.
Earnings per share were $2.24 for the quarter.
This came on a revenue of T$868.46 billion, up nearly 39% from the same period last year. The jump was driven chiefly by increasing sales and market share of TSMC’s advanced 3-nanometer chips.
For the first quarter of 2025, TSMC CFO Wendell Huang forecast revenue between $25 billion and $28 billion, citing some softer seasonal trends in smartphone demand and AI investment.
Huang said he expects TSMC’s overall capacity utilization rate to marginally improve in 2025.
The company is the world’s biggest contract chipmaker, and has benefited greatly from a surge in AI-fueled demand for advanced chips over the past two years.
TSMC is set to ramp up capital spending in the face of more AI demand in the year, with Huang pegging 2025 capital expenditures between $38 billion- $42 billion, up sharply from $29.8 billion in 2024. About 70% of this will be for advanced processes technologies, TSMC’s biggest revenue earner.
For 2025, TSMC CEO CC Wei forecast revenue growth around mid-20% in dollar terms, stating that the company will continue to benefit from sustained AI demand.
The company ranks tech giants such as NVIDIA Corporation (NASDAQ:NVDA) and Apple Inc (NASDAQ:AAPL) among its biggest customers, and has benefited greatly from increased capital spending on AI infrastructure, particularly on data centers used to power AI programs.
TSMC also acts as a bellwether for the broader chip industry and AI demand.
But TSMC company could face some earnings pressure in the coming years, especially as the U.S. recently outlined even more restrictions on the export of advanced chip and AI technology into China.
TSMC had come under increased scrutiny in late-2024 after a report showed that a shipment of its advanced chips had ended up with Chinese tech giant Huawei, which is blacklisted by the U.S.