TSMC’s Upbeat Outlook Fuels Hopes for 2025 AI Spending
(Bloomberg) — A Taiwanese semiconductor manufacturing company reported quarterly sales and capital spending ahead of analysts’ estimates, hoping spending on AI hardware will remain strong in 2025.
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The major chip maker of Apple Inc. and Nvidia Corp. has forecast that it will spend between $38 billion and $42 billion this year on technology and capacity, or up to 19 percent more than analysts had expected. It forecast revenue of $25 billion to $25.8 billion in the March quarter, about 6% above estimates. Shares in TSMC have risen sharply since October, and the proposed spending has helped fuel a rally among U.S. and European chip equipment companies including Applied Materials Inc and ASML Holdings NV.
TSMC’s strong performance fueled optimism around an unprecedented AI spending cycle that pushed the likes of Nvidia to new heights. ChatGPT’s arrival has fueled data center construction that has been disrupted for the past two years, benefiting a number of companies that provide the pipes and brains of the AI boom.
Still, the lack of AI applications that have yet to generate significant profits has raised concerns about a potential bubble. And like much of the industry, TSMC is grappling with uncertainty from a US-China technology conflict that threatens to disrupt supply chains and curb the flow of chips around the world. The US this month announced new export control rules on AI chips to limit supplies to China.
Follow Chip Giant TSMC’s Quarterly Results in Real Time: TOPLive
Away from AI, TSMC is heavily dependent on consumer electronics and smartphones, with Apple remaining its biggest customer. Although the industry expects mobile AI features to expand over time, iPhone sales have remained muted.
On Thursday, CEO Sis Wei warned that smartphone unit growth will remain in the low single-digits through 2025. But he said there will be some recovery in other segments except AI.
TSMC shares rose 7.3% in New York, the biggest daily gain since Oct. 17, and semiconductor equipment supplier ASML rose 4% in New York and 2.6% in Amsterdam. It also acquired Tokyo Electron Ltd. in Asia.
The world’s largest chip maker reported a better-than-expected 57 percent rise in revenue.
