DJ TSMC Sales Soar 42%. But a Threat Hangs Over the Chips Stock. -- Barrons.com
9:57 AM ET 4/10/25 | Dow Jones
Taiwan Semiconductor Manufacturing is benefiting from a surge in sales, powered by artificial-intelligence chips. However, the stock looks unlikely to rally until there's clarity over tariffs on the semiconductor sector.
The Taiwanese chip manufacturer, known as TSMC, reported a 42% rise in its first-quarter sales to 839.3 billion New Taiwan dollars ($25.6 billion) on Thursday. That was slightly ahead of market expectations of NT$834.7 billion, according to a FactSet poll of estimates.
TSMC didn't give any detail on the makeup of sales -- that will have to wait until its earnings report on April 17 -- but the driver is likely AI chips. The company has previously said it expects revenue from AI-related chips to double in 2025 and grow at a mid-40% annual growth rate for the next five years.
However, its American depositary receipts were down 3.3% in early trading, after rising 12% the previous day when President Donald Trump said he would pause reciprocal tariffs on many countries. TSMC's ADRs are down 22% this year so far.
Chips have been exempt from the Trump administration's tariffs until now. However, Trump has repeatedly suggested he is considering imposing tariffs on chips produced outside the U.S. and it isn't clear if TSMC would receive a waiver on such levies despite pledging a total of $165 billion in U.S. investment.
If chips are targeted, TSMC might benefit from a tariff rule that says if at least 20% of an imported item's value is "produced or transformed in the U.S.," the tariffs will be levied on the non-U. S. content.
TSMC is the main supplier of chips for Nvidia, which leads the market for semiconductors used for AI applications. TSMC also makes the core processors inside Apple iPhones, Qualcomm mobile chipsets, and processors made by Advanced Micro Devices.
Write to Adam Clark at adam.clark@barrons.com
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