TSMC climbs on blowout sales, sees AI revenues doubling this year
AI-centric sales poised to keep booming and supply remains more of a constraint than demand.
TSMC, the world’s largest semiconductor producer, is jumping 5% in the premarket after posting stronger fourth-quarter results and a better outlook than analysts anticipated, saying that AI-centric revenues are poised to double this year after tripling in 2024.
Some highlights from the quarterly report and earnings call:
Adjusted earnings per share of $0.45 beat expectations.
Revenues of $26.8 billion were above all projections.
Even the low end of its guided ranges for revenues ($25 billion to $25.8 billion) and operating margins for Q1 (between 46.5% to 48.5%) exceeded the consensus estimate for these metrics.
TSMC plans to aggressively expand to accommodate the AI boom: full-year planned capex ranges from $38 billion to $42 billion, compared to an estimate of $35.2 billion.
HPC (high-performance computing) sales, some of which are tied to the AI build-out, accounted for more than half of TSMC’s fourth-quarter revenues and posted the fastest sequential growth of any segment.
So-called AI accelerators “accounted for close to mid-teens percent of our total revenue in 2024,” according to Chairman and CEO CC Wei, who expects these sales to double this year after tripling in 2024.
Demand still exceeds supply: “We have very tight capacity and cannot even meet customers’ need,” Wei said. Later, on a question on whether there was more upside/downside to the expectation that AI-centric revenues would double in 2025, he suggested it was more a matter of supply than demand.
There’s still a big divide between AI and ex-AI demand. Per Wei: “2024 was a mixed year of recovery for the global semiconductor industry. AI-related demand was strong while our other applications saw only a very mild recovery, as macroeconomic conditions weigh on consumer sentiment and end-market demand.”
On trade and tariffs, particularly relevant to TSMC given it makes geopolitically sensitive materials and produces its most advanced products in a geopolitically fraught location:
“Let me assure you that we have a very frank and open communication with the current government and with the future one also,” Wei said. “I cannot say anything more than that.”
Export restrictions recently announced by the Biden administration are “not significant” and “manageable” for TSMC, the CEO added.
American customers matter most: North America accounted 75% of sales compared to just 9% for China (a share that slipped versus Q3).
