TLDR
- TSMC raised 2025 revenue growth guidance to mid-30% for the second time this year, following a previous increase just three months ago.
- Third-quarter net profit reached NT$452.3 billion ($14.8 billion), up 39% year-over-year and exceeding analyst forecasts.
- Capital expenditure target increased to minimum $40 billion for 2025, up from $38 billion previously.
- CEO C.C. Wei says AI chip demand is stronger than expected and will offset lost China business from US sanctions.
- Company projects AI chip revenue to double in 2025 with mid-40% annual growth over next five years.
TSMC keeps raising the bar for AI chip growth expectations.
The world’s largest contract chipmaker increased its 2025 revenue growth forecast to the mid-30% range. This marks the second guidance boost this year. The previous increase happened just three months ago and triggered a rally that added over $260 billion to market capitalization.
Third-quarter results backed up the optimism. Net profit hit NT$452.3 billion ($14.8 billion), up 39% from last year. The figure topped analyst expectations of NT$410.58 billion.
Quarterly revenue climbed 30% to NT$989.92 billion. In US dollar terms, revenue reached $33.10 billion, representing a 41% increase. Currency movements account for the difference in reported growth rates.
AI Chips Drive Growth
CEO C.C. Wei delivered a clear message about demand trends. “Conviction in the AI megatrend is strengthening,” he told analysts. “The AI demand actually continues to be very strong, stronger than we thought three months ago.”
The company manufactures chips for Nvidia’s AI accelerators. TSMC also produces processors for Apple iPhones, Qualcomm mobile chipsets, and AMD computing products.
TSMC expects AI-related chip revenue to double in 2025. Looking forward, the company forecasts mid-40% annual growth for AI chips through the next five years. That projection reflects confidence in sustained artificial intelligence infrastructure spending.
Capital Spending Increases
TSMC raised its minimum capital expenditure target for 2025. The company now plans to spend at least $40 billion on capacity expansion and equipment upgrades. That’s up from the previous $38 billion floor.
The spending reflects preparation for continued strong demand. CFO Wendell Huang said fourth-quarter business should benefit from “continued strong demand for our leading-edge process technologies.”
Fourth-quarter revenue guidance came in between $32.2 billion and $33.4 billion. The forecast suggests momentum continues into year-end.
Geopolitical Challenges Addressed
Wei acknowledged challenges from US-China tensions during the earnings call. American sanctions have limited access to China’s semiconductor market. Beijing responded with restrictions on rare-earth mineral exports.
The CEO argued AI demand growth will compensate for lost Chinese business. Bloomberg Intelligence analyst Matthew Bloxham noted the company’s confident outlook. “They seem very optimistic that even without China, there’s very robust demand for their platforms,” he said.
Some market observers have raised concerns about potential AI investment bubbles. TSMC dismissed these worries and emphasized ongoing customer dialogue about future capacity needs.
TSMC’s American depositary receipts gained 2.2% in premarket trading. The stock has risen 54% year-to-date through Wednesday’s close. The performance reflects investor belief in the AI spending cycle’s durability.
Bloomberg Intelligence analysts suggest TSMC could raise prices for advanced nodes by 5-10% in 2026. The company’s dominance in cutting-edge manufacturing gives it pricing power as demand stays strong.
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