Prime Highlights:
TSMC’s Q4 net income surged 57%, reaching a record NT$374.68 billion, driven by booming demand for AI chips.
Q4 revenue increased by 38.8% year-over-year, totaling NT$868.46 billion, surpassing analyst estimates.
The company’s AI-focused high-performance computing (HPC) division, which contributed 53% of Q4 revenue, experienced a 19% growth from the previous quarter.
Key Background:
Taiwan Semiconductor Manufacturing Co. (TSMC) reported strong financial results for the fourth quarter of 2024, with both revenue and net profit exceeding analysts’ expectations. The world’s largest contract chipmaker recorded a record-high net income of NT$374.68 billion ($12.26 billion), representing a 57% year-on-year increase. The company’s fourth-quarter revenue rose by 38.8% to NT$868.46 billion ($26.36 billion), surpassing the consensus estimate of NT$850.08 billion.
TSMC’s performance was largely driven by surging demand for advanced chips used in artificial intelligence (AI) applications. The high-performance computing (HPC) division, which includes AI and 5G technologies, generated 53% of TSMC’s Q4 revenue, marking a 19% increase from the previous quarter. This surge reflects the growing reliance on sophisticated processors, particularly from major clients like Nvidia and Apple, to support AI innovations.
“The demand for AI chips exceeded expectations in Q4,” said Brady Wang, an associate director at Counterpoint Research, noting that sales were also supported by the advanced chips featured in Apple’s iPhone 16. Additionally, TSMC’s total revenue for 2024 reached NT$2.9 trillion, setting a new record for the company since it went public in 1994.
Looking ahead, TSMC remains optimistic about the future of AI. CFO Wendell Huang highlighted that revenue from AI accelerators made up a significant portion of the company’s total revenue in 2024 and is expected to continue its rapid growth, with forecasts predicting a doubling of AI-related revenue in 2025. However, TSMC may face challenges in 2025, including potential U.S. trade restrictions on advanced semiconductor exports to China and uncertainties surrounding U.S. trade policies under the new administration. Despite these potential headwinds, analysts predict that TSMC will continue to experience robust growth, driven by the expanding demand for AI applications worldwide. Shares of TSMC surged by 81% in 2024 and saw an additional 3.75% increase on Thursday, reflecting investor confidence in the company’s strong market position.
