(Bloomberg) — Taiwan Semiconductor Manufacturing Co. projected quarterly sales and capital expenditure ahead of analysts’ estimates, fueling hopes that spending on AI hardware should remain resilient in 2025.
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The main chipmaker to Apple Inc. and Nvidia Corp. projected revenue of $25 billion to $25.8 billion in the March quarter, surpassing the $24.4 billion analysts predicted on average. The Taiwanese company foresees spending $38 billion to $42 billion on technology and capacity upgrades this year, exceeding the $35.2 billion estimate.
The strong performance is likely to buoy optimism that the AI spending cycle that drove TSMC and Nvidia to new heights will continue this year. The advent of ChatGPT spurred a frenzied datacenter build-out over the past two years, though the lack of a big profit-generating AI application so far has stoked concerns about a potential bubble.
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Still, the Taiwanese company is grappling with uncertainties stemming from the US-China tech conflict. The US this month announced new export control rules on AI chips to curtail their flow to China. Apple remains TSMC’s largest customer, and iPhones sales are expected to be muted.
The world’s biggest chipmaker also reported a better-than-expected 57% rise in net income Thursday. Its shares jumped over 80% in 2024, marking the biggest percentage gain since 1999.
“For the driver, besides the ongoing robust AI chip demand, there will be support from new smartphone chips and AI PCs, possibly more outsourcing orders from Intel, and WiFi 7 chips,” Bloomberg Intelligence analyst Charles Shum said about the 2025 revenue outlook.
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TSMC may be able to retain over half of its existing orders from China, following the Biden administration’s restrictions on advanced-chip production for country-exempt chips with fewer than 30 billion transistors, as reported by Bloomberg News. This would allow TSMC to maintain sales of smartphone SoCs and mid-range computing chips for China. Chinese chip orders accounted for 12.6% of TSMC’s revenue in January-September.
Geopolitical tensions have pushed TSMC to expand globally. Investors will be focused on how factories in Arizona and Japan ramp up and whether additional expansion plans stay on track or get delayed.
