Taiwan Semiconductor Manufacturing Company (TSMC) recently shocked industry analysts with fourth-quarter results that greatly surpassed expectations, solidifying its position as the cornerstone of semiconductor manufacturing globally. The company reported net revenue of NT$868.46 billion (approximately $26.36 billion), exceeding the anticipated NT$850.08 billion. Furthermore, net income rose to NT$374.68 billion, surpassing forecasts of NT$366.61 billion. This remarkable performance reflects a striking 38.8% increase in revenue year-over-year, accompanied by a significant 57% uptick in net income. As a result, TSMC closed the year with a breathtaking annual revenue total of NT$2.9 trillion, making 2024 a watershed year since its public listing in 1994.
The primary catalyst behind TSMC’s exceptional financial performance is the burgeoning demand for advanced semiconductors tailored for artificial intelligence (AI) applications. The company’s high-performance computing (HPC) division, which encompasses AI technologies and 5G innovations, played a pivotal role in driving fourth-quarter revenue, contributing a striking 53% of overall sales. This division’s revenue grew by 19% from the previous quarter, further underscoring TSMC’s adaptability in navigating market shifts. Brady Wang, an associate director at Counterpoint Research, observed that “the surging demand for AI chips has exceeded expectations in Q4,” linking TSMC’s growth to heightened demand for chips in products like Apple’s iPhone 16.
Looking ahead, TSMC has expressed optimism regarding continued strong demand for AI-related semiconductors throughout 2024. CFO Wendell Huang shared insights during an earnings call, stating that revenue from AI accelerator products could reach “close to a mid-teens percentage” of the total revenue in 2024. He added that their forecasts indicate a doubling of AI accelerator revenue in 2025, as demand for AI applications is poised to escalate further. However, it is crucial to note that the company may encounter challenges stemming from U.S. export controls on China and the impending trade policies of President-elect Donald Trump, who has previously criticized Taiwan’s influence on the U.S. semiconductor market.
Despite potential hurdles, analysts remain bullish on TSMC’s growth trajectory. Counterpoint’s Wang predicts 2025 will continue to be a robust year for the company, fueled by the expanding demand for AI applications across diverse industries. The positive sentiment is echoed in the stock market, where TSMC shares surged 81% in 2024 and were trading 3.75% higher as recent earnings were reported. As TSMC navigates the complexities of international trade and rising competition, its success in capitalizing on AI demand remains pivotal in shaping the future of the semiconductor industry.
TSMC’s fourth-quarter results highlight the company’s ability to adapt and excel in an evolving technological landscape. With both challenges and growth opportunities ahead, TSMC stands as a key player to watch in the semiconductor sector, ensuring its dominance remains unchallenged in the age of artificial intelligence.