By Sherry Qin


Taiwan Semiconductor Manufacturing Co. reported another record quarter on AI-driven demand for chips and said it expects continued growth even as it navigates the U.S.-China technology rivalry.

The world's largest contract chip maker said Thursday that fourth-quarter net profit jumped 57% to 374.68 billion New Taiwan dollars, equivalent to US$11.37 billion, topping analysts' expectations in a FactSet poll. Revenue rose 39% from a year earlier to NT$868.46 billion for the quarter, with the gross margin climbing to 59%.

TSMC Chairman and Chief Executive C.C. Wei said revenue from AI-related servers and processors is expected to double in 2025 after more than tripling last year to account for 18% of its total revenue.

Supported by the strong AI demand, the company guided for mid-20% growth in sales this year and said it expects first-quarter revenue of between US$25.0 billion and US$25.8 billion.

Artificial intelligence will likely remain a long-term growth catalyst for TSMC, driven by the continued global investment in AI infrastructure. Deutsche Bank analyst Robert Sanders said in a recent note that the Taiwanese company's sales growth will be closely tied to Nvidia, which could account for 18% of TSMC's sales in 2025.

TSMC in a postearnings call said it thinks the AI momentum has just begun and its long-term revenue compound annual growth rate could reach 20%, even on 2024's high base, as the technology becomes more widely deployed.

Last year, shares in Taiwan-listed TSMC soared more than 80% on robust AI-related demand. The index heavyweight helped Taiwan become the best-performing major Asian market in 2024 with a 28% gain.

TSMC has been expanding its footprint overseas, building facilities in Japan and the U.S. The company expects the overseas facilities ramp-up to dilute its gross margin, forecasting first-quarter margin at 57%-59%.

The Taiwanese chip giant has also found itself in the crossfire of the U.S.-China chip war. Its technology was found in Huawei's AI chips last year, prompting the U.S. to roll out several new restrictions and now requiring chip makers that ship advanced semiconductors to China, including TSMC, to obtain licenses for transactions.

Wei said Thursday that the current impact is "not significant" and "manageable," as it is working with clients to better handle the situation.

Analysts at Citi, who commented before the license requirement, expected the recent curbs to have little impact on TSMC's AI chip demand, saying the chip maker's solid technology and execution should help it withstand potential order and share-price volatility in the near term.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

01-16-25 0303ET