Taiwan Semi rises after AI demand boosts sales; tariff woes linger; quashes venture speculations
Apr. 17, 2025 6:02 AM ET
By: Ravikash Bakolia, SA News Editor\
Shares of Taiwan Semiconductor (NYSE: TSM) rose about 5% on Thursday after the global foundry reported fourth-quarter results, and the company noted that it is not in discussions to form a venture or share its technology with any company.
TSM — which produces chips for some of the world's largest tech companies, including Apple ( AAPL), Nvidia ( NVDA) and AMD ( AMD) — saw first quarter 2025 net revenue grew 35.3% year-over-year to $25.53B (NT$839.25B, +41.6% Y/Y). However, the figures missed analysts' estimates. Compared to the fourth quarter of 2024 net revenue fell -5.1%, when the company generated $26.88B.
“Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.” said Wendell Huang, senior VP and CFO of TSM in the first quarter press release.
Earnings per American Depositary Receipt was $2.12, compared to $1.38 in the first quarter of 2024, beating analysts estimates.
Tariffs:
TSM Chief Executive C.C Wei said on the company's earnings call that "we understand there are uncertainties and risks from the potential impact of tariff policies, however, we have not seen any change from our customers behaviour we have so far. Therefore we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms. We might get a better picture in the next few months, and we will continue to closely monitor the potential impact to the end market demand and manage our business prudently."
AI demand outlook:
"We continue to observe robust AI related demand from our customers throughout 2025. We reaffirm our revenue from AI accelerators to double in 2025," said Wei on the earnings call.
The company also sees CoWoS, or Chip on Wafer on Substrate, capacity doubling this year.
Wei also talked about DeepSeek ( DEEPSEEK). "Recent developments are also positive to AI's long-term demand outlook." He noted that impact from AI reasoning models, including Deepseek, can help lower the barrier to future AI development.
Investment in the U.S.Wei reiterated the company's pledge to invest an additional $100B in the U.S. The investment includes the setting up of three additional wafer manufacturing fabs, two packaging fabs and a major research and development, or R&D, center, according to Wei.
Wei noted that this would bring the company's total investment in the U.S., including the Arizona facility, to $165B.
Wei also quashed speculations about TSM's discussion with any company for a joint venture.
"I would also to mention that TSMC is not engaged in any discussion with other companies regarding any joint venture, technology licensing or technology transfer and sharing," said Wei.
Earlier this month, it was reported that Intel ( INTC) and TSM reached a preliminary agreement to form a joint venture to operate some of Intel's foundry facilities. This followed a report from March that said TSM had proposed a joint venture, in which it would operate Intel's factory, to several major U.S. chip manufacturers, including Nvidia ( NVDA), AMD ( AMD), and Broadcom ( AVGO).
Outlook:
TSM reiterated the 2025 capital expenditure budget to be between $38B and $40B.
The company expects second quarter revenue to be between $28.4B and $29.2B.
TSM expects 2025 revenue to increase by close to mid-20s% in U.S. dollar terms.
From 2024 to 2029, the company's management expects revenue CAGR to approach 20% in U.S. dollar terms
Q4 Revenue by Technology:
TSM said 3nm process technology contributed 22% of total wafer revenue in the first-quarter, versus 9% in the year ago period, and 26% in the fourth quarter of 2024.
The 5nm process technology accounted for 36% of total wafer revenue, compared to 37% in the same period a year ago, and 34% in the fourth quarter of 2024. Meanwhile, 7nm accounted for 15% of total wafer revenue in the first quarter versus 19% a year earlier, and 14% in the fourth quarter of 2024.
Q4 Revenue by Platform:
High Performance Computing represented 59% of net revenue, up from 46% in the first quarter of 2024. The company's smartphone segment represented 28% of net revenue, versus 38% in the year ago period.
Q4 Revenue by Geography:
Revenue from China — Taiwan Semi's third-biggest market by revenue this quarter behind North America and Asia Pacific — accounted for 7% of the total net revenue in the period, down from 9% in the year-ago period and in the fourth quarter of 2024.
North America accounted for 77% of total net revenue coming from it, compared to 69% a year earlier, and 75% in the fourth-quarter of 2024. |
