TSMC profit soars 57% on AI chip demand

TSMC, the world’s largest semiconductor manufacturer, reported a 57% increase in quarterly profit driven by strong demand for AI chips.

Financial performance highlights: Taiwan Semiconductor Manufacturing Corp. exceeded market expectations with significant growth in both profit and revenue during the fourth quarter of 2023.

• Net profit reached 374.7 billion new Taiwan dollars ($11.4 billion), marking a 57% increase
• Revenue for 2024 grew by nearly 34% to 2.9 trillion new Taiwan dollars ($88 billion)
• Fourth-quarter revenue rose 38.8% to 868.46 billion new Taiwan dollars ($26.4 billion)

Geopolitical context: Recent U.S. export restrictions on advanced AI chips could impact TSMC’s operations and market dynamics.

• The U.S. has implemented new rules limiting AI chip exports to most countries
• About 20 close allies, including Taiwan, will maintain unlimited access to U.S. AI technology
• These restrictions are part of broader U.S. efforts to limit China’s access to advanced technology

Strategic expansion: TSMC is pursuing a significant global manufacturing presence through new facilities in key markets.

• Plans include construction of three factories in the United States
• Two additional manufacturing facilities are planned for Japan
• Both Japanese and U.S. governments are providing substantial funding and subsidies to support domestic chip production

Looking ahead: While TSMC’s current performance demonstrates the strong demand for AI-related semiconductors, the impact of new export controls and geopolitical tensions could reshape the company’s growth trajectory in key markets like China.