TSMC’s Record-Breaking Revenue Driven by AI Demand
The Taiwan Semiconductor Manufacturing Company (TSMC) has once again demonstrated its dominance in the semiconductor industry by posting impressive revenue figures for the December quarter. The company’s financial performance has exceeded analyst expectations, largely due to the ongoing boom in artificial intelligence (AI) technology.
According to CNBC calculations, TSMC reported a fourth-quarter revenue of 868.5 billion New Taiwan dollars, equivalent to $26.3 billion. This marks a significant 38.8% increase compared to the same period last year. The reported revenue surpassed the Refinitiv consensus estimates, which had projected 850.1 billion New Taiwan dollars.
For the entire year of 2024, TSMC’s revenue reached an unprecedented 2.9 trillion New Taiwan dollars, marking the highest annual sales since the company went public in 1994. This remarkable achievement underscores TSMC’s pivotal role in the global semiconductor market.
TSMC’s Role in the Global Semiconductor Industry
TSMC is renowned for manufacturing semiconductors for some of the world’s largest and most influential companies, including Apple and Nvidia. The company’s reputation as the most advanced chipmaker globally is well-deserved, given its ability to produce cutting-edge semiconductors.
The demand for AI chips, particularly from Nvidia, has been a significant driver of TSMC’s success. The company has also benefited from the continuous improvement in smartphone semiconductors, further solidifying its position in the industry.
Brady Wang, an associate director at Counterpoint Research, highlighted TSMC’s advantage in the AI sector. “TSMC has benefited significantly from the strong demand for AI,” Wang told CNBC. He noted that the “capacity utilization” for TSMC’s 3 nanometer and 5 nanometer processes, which are the most advanced chips, “has consistently exceeded 100%.”
AI’s Impact on TSMC’s Growth
The demand for AI graphics processing units (GPUs), such as those designed by Nvidia, and other AI chips is a key factor driving TSMC’s growth. This demand has led to a significant increase in the company’s stock value, with Taiwan-listed shares of TSMC rising by 88% over the past 12 months.
TSMC’s latest sales figures provide optimism for investors, suggesting that the demand for AI chips and services may continue to grow into 2025. This trend is further supported by other industry players experiencing similar growth due to AI demand.
Industry-Wide AI Demand
Other companies in the tech industry are also experiencing a surge in demand for AI-related products and services. For instance, Foxconn, which assembles Apple’s iPhones, recently reported its highest-ever fourth-quarter revenue. This achievement is attributed to the strong demand for AI servers, as detailed in a recent report.
Meanwhile, Microsoft has announced plans to invest $80 billion in its fiscal year ending in June to construct data centers capable of handling AI workloads. This significant investment underscores the growing importance of AI in the tech industry.
Conclusion
TSMC’s impressive financial performance highlights the company’s strategic positioning in the semiconductor industry, particularly in the AI sector. As AI technology continues to evolve and expand, TSMC is well-positioned to capitalize on the increasing demand for advanced semiconductors. The company’s ability to consistently exceed expectations and set new revenue records is a testament to its innovation and leadership in the global market.
CNBC’s Jordan Novet contributed to this report.
Originally Written by: Arjun Kharpal
