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TSMC Poised for Significant Profit Growth Amid AI Demand
TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co. (TSMC), a leader in advanced chip production for artificial intelligence (AI) applications, is anticipated to announce a remarkable 58% increase in profits for the fourth quarter, driven by skyrocketing demand for its products.
As the largest contract chipmaker globally, TSMC counts major technology firms such as Apple and Nvidia among its clientele. The company has capitalized on the ongoing AI boom, which has significantly influenced its revenue streams. However, TSMC is also navigating several challenges, primarily stemming from U.S. government restrictions on technology exports to China and potential trade policies anticipated from the President-elect’s administration, which have raised the prospect of broad import tariffs.
Recent statements from the U.S. government indicate that further limitations on the export of AI-related chips and technologies will be implemented, which could introduce additional hurdles for TSMC. However, it has been clarified that Taiwan and other key U.S. allies will retain unrestricted access to American AI technology, somewhat alleviating concerns over TSMC’s operational landscape.
Analysts anticipate that TSMC will report a net profit of T$377.95 billion (approximately $11.44 billion) for the quarter ending December 31, based on a LSEG SmartEstimate that aggregates insights from 22 analysts. This figure represents a significant upsurge from the net profit of T$238.7 billion recorded in the same quarter of the previous year.
In its previous earnings report last week, TSMC displayed a notable increase in fourth-quarter revenue in Taiwan dollars, surpassing market predictions. The company is expected to provide its revenue forecasts in U.S. dollars during its forthcoming quarterly earnings call, scheduled for Thursday at 0600 GMT.
In an effort to enhance its production capabilities, TSMC is investing billions in new manufacturing facilities abroad, including a substantial $65 billion dedicated to the construction of three plants in Arizona, USA. Nonetheless, TSMC has asserted that the majority of its manufacturing operations will continue to be centered in Taiwan.
During its earnings call, TSMC will also provide updates on its projections for the current quarter and the entire fiscal year, along with planned capital expenditures to support its ambitious expansion plans.
On the previous earnings call held in October, TSMC indicated that it expects its capital expenditure for 2025 to exceed levels seen in 2024. While a precise figure wasn’t disclosed, the company had estimated that capital spending for 2024 would be marginally above $30 billion.
The ongoing AI surge has significantly bolstered TSMC’s stock value, making it Asia’s most valuable company. TSMC’s shares, listed in Taipei, climbed an impressive 81% last year, outpacing a 28.5% increase in the overall market.
($1 = 33.0390 Taiwan dollars)
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