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Taiwan Semiconductor Manufacturing Company (TSMC) once again exceeded market expectations with its latest earnings release. The company marked its 14th consecutive quarter of beating earnings per share (EPS) estimates, reinforcing its position as the global leader in chip manufacturing. This stellar performance is largely driven by sustained demand for advanced node technologies, particularly in high-growth segments such as artificial intelligence (AI) and high-performance computing (HPC).
The company reported:
TSMC’s profit surged 57% year-over-year, reaching an all-time high, while revenue saw a 38.8% increase from the prior year and 14% rise from the previous quarter, reflecting strong momentum in advanced chip sales. TSMC’s full-year revenue for 2024 reached NT$2.9 trillion, making it the company’s most successful financial year since going public in 1994. AI accelerator sales contributed significantly, forming a mid-teens percentage of the company’s total revenue.
The 3-nanometer (3nm) and 5-nanometer (5nm) process technologies accounted for 60% of total wafer revenue, with 3nm alone contributing 26%, highlighting the rapid adoption of cutting-edge semiconductor technology.
AI-driven growth played a crucial role in these results. Revenue from AI accelerators, including graphics processing units (GPUs), application-specific integrated circuit (ASICs), and high-bandwidth memory (HBM) controllers more than tripled in 2024.
Expanding Margins and ProfitabilityBeyond top-line growth, TSMC reported record profitability in Q4, driven by operational efficiencies and increased scale. Gross margin climbed to 59.0% in Q4, marking a significant rise from 57.8% in the previous quarter and 53.0% in the same period last year, while operating margin improved from 47.5% to 49.0%. This strong profitability was driven by a combination of higher capacity utilization, productivity improvements, and strategic pricing adjustments. The company’s net profit margin climbed to 43.1%, leading to record-breaking diluted earnings per share of NT$14.45 EPS.
AI and HPC Drive GrowthAs the world’s leading contract chip manufacturer, TSMC supplies cutting-edge processors to tech giants like Nvidia and Apple. The AI revolution has significantly boosted TSMC’s high-performance computing division, which accounted for 53% of total revenue in Q4, marking a 19% quarter-over-quarter growth.
The demand for AI chips exceeded expectations in Q4, with additional revenue driven by Apple’s latest iPhone 16 series.
Looking ahead, TSMC expects continued strong growth in 2025, projecting mid-20s percentage revenue expansion in U.S. dollar terms. AI accelerators are set to remain a major growth driver, with revenue from this segment expected to double following a threefold increase in 2024. However, seasonal demand fluctuations, particularly in the smartphone market, may lead to slight quarter-over-quarter contractions in revenue and margins in early 2025.
Capital Expenditure Surge Signals Strong AI DemandAfter spending $29.8 billion in capital expenditure (capex) in 2024 to expand its capacity, TSMC ambitiously plans to increase capital expenditure significantly in 2025 to $38 billion – $42 billion. Around 70% of this investment will be allocated to advanced process technologies, highlighting the company’s dedication to sustain its technological leadership and addressing the growing demand for cutting-edge chips.
TSMC first announced its investment in Arizona in May 2020, with its total commitment across three state-of-the-art chip fabrication plants exceeding $65 billion. Most of this investment followed the passage of the CHIPS Act in August 2022, which allocated nearly $53 billion to strengthen the U.S. semiconductor supply chain and counter China’s growing dominance in the industry. TSMC has secured a commitment of $6.6 billion from the Biden administration’s CHIPS Act.
Despite facing some delays, TSMC’s first Arizona fabrication plant began producing advanced chips in the fourth quarter of last year and the construction of two other plants is underway. The construction of the second plant is on schedule, with operations expected to begin in 2028.
TSMC’s VP/CFO Wendell Huang expressed confidence that the funding will continue under Trump’s leadership. According to Huang, the financial support is tied to construction and production milestones, ensuring a gradual disbursement of funds. In Q4 the company received the first batch of government support of $1.5 billion.
While Trump has signalled his intention to prioritize competition with China and domestic manufacturing, there is speculation about whether his administration will reassess the CHIPS Act.
During his campaign, Trump criticized the legislation and its cost, arguing that imposing tariffs would be a more effective approach to boosting domestic chip production. Additionally, he reiterated his claims that Taiwan was “stealing” the U.S. semiconductor business; however, Trump is likely to maintain the CHIPS Act due to its strong bipartisan support in Washington.
Source: TradingView
Optimistic Growth Prospects for 2025TSMC remains confident in its growth trajectory, projecting revenue to rise by nearly the mid-20% range in U.S. dollar terms in 2025. The company anticipates AI accelerators to be the key driver of this expansion, with revenue from this segment expected to double in the coming year.
The company’s long-term outlook is equally optimistic, forecasting revenue to grow at an approximate 20% compound annual growth rate (CAGR) in U.S. dollar terms over the next five years. This sustained expansion is expected to be driven by all four of TSMC’s major platforms: smartphones, high-performance computing, internet of things (IoT), and automotive.
Despite a 90% increase in TSMC’s stock price in 2024 the shares appear poised for further gains in 2025 given its robust growth trajectory. Prices in the range between $250 and $260 appear feasible in the months ahead.
ConclusionTSMC remains at the forefront of AI-driven semiconductor innovation, benefiting from surging investments in AI data centres, cloud computing, and high-performance processors. TSMC’s record-breaking Q4 2024 results reinforce its dominance in the semiconductor industry, particularly in AI and HPC markets. With expanding margins, a strong revenue outlook, and continued investments in next-generation technology, the company is well-positioned for sustained growth.
While geopolitical tensions and trade restrictions pose risks, its aggressive capital spending and continued leadership in advanced chipmaking solidify its dominance in the global semiconductor market.
Investors looking for exposure to the AI and semiconductor revolution may find TSMC an attractive opportunity, even after stellar share price gains in 2024. Professional investors looking for magnified exposure to TSMC may consider Leverage Shares +3x Taiwan Semiconductor or -3x Taiwan Semiconductor ETPs.
Footnotes:Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
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This information originates from Investium Limited, which has been appointed as distributor of Leverage Shares products in Europe by Leverage Shares Management Company Limited (the “Arranger”). Investium Limited with registered address at 6 Nikou Georgiou Street, Office 302, 1095 Nicosia Cyprus, is a financial services provider regulated by the Cyprus Securities and Exchange Commission (CySEC).
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