Taiwan Semiconductor fuels the "AI faith"! After Q3 performance exceeded expectations, it raised guidance for 2025
After TSMC's third-quarter performance exceeded expectations, it raised its revenue growth forecast for 2025 to the mid-range of 30%, demonstrating strong confidence in the demand for AI components such as those from NVIDIA. Third-quarter revenue was $33.1 billion, a year-on-year increase of 40.8%, with earnings per share of $2.92, surpassing market expectations. TSMC also raised its capital expenditure target, expecting to invest at least $40 billion in capacity expansion by 2025. As a global leader in semiconductor manufacturing, TSMC plays a crucial role in AI infrastructure spending
According to Zhitong Finance APP, Taiwan Semiconductor Manufacturing Company (TSMC.US) has raised its revenue growth forecast for 2025 to the mid-range of 30%, reflecting strong confidence in the demand for artificial intelligence components such as chips from NVIDIA. The financial report shows that TSMC's revenue for the third quarter was $33.1 billion, a year-on-year increase of 40.8%, far exceeding market expectations; earnings per share were $2.92, higher than the market expectation of $2.60.
After a 39% surge in profits in the third quarter to NT$452.3 billion (approximately $14.8 billion), TSMC also raised the lower limit of its capital expenditure target for this year. The company has now allocated at least $40 billion for capacity expansion and upgrades in 2025, up from the previous lower limit of $38 billion.
In the third quarter, TSMC's 3-nanometer shipments accounted for 23% of total wafer revenue; 5-nanometer accounted for 37%; and 7-nanometer accounted for 14%. Advanced technologies (defined as 7 nanometers and more advanced) accounted for 74% of total wafer revenue.
These results highlight how TSMC, as the preferred chip manufacturer for Apple (AAPL.US) and most of the world's largest semiconductor designers, remains one of the main beneficiaries of the AI infrastructure spending boom—expected to exceed $1 trillion in the coming years. From OpenAI to Oracle Corporation, tech companies are competing to build data centers that support this technology in the post-ChatGPT era.
Against the backdrop of a continued absence of mainstream AI applications and services, this investment frenzy, coupled with the rapid rise in tech stock valuations, inevitably draws comparisons to the internet bubble.
TSMC's upgraded outlook is particularly noteworthy, as it had just raised its revenue guidance last July. At that time, the company indicated that it expected growth "to be approximately" 30%, while on Thursday, management projected that the increase would reach the mid-range of 30%.
As the world's most advanced semiconductor manufacturer, TSMC plays a leading role in the AI investment boom centered around NVIDIA. The company produces powerful accelerators that are crucial for training and running AI services like ChatGPT and Google Gemini.
It is also the exclusive manufacturer of processors for the iPhone and many other devices, while consumer electronics demand remains uncertain amid the ongoing trade friction between China and the United States.
Following China's restrictions on rare earth mineral exports and the subsequent additional tariffs and restrictions imposed by the U.S. on software sales to China, global semiconductor supply chain companies are preparing for potential disruptions.
However, TSMC's main equipment supplier ASML Holding stated on Wednesday that demand for its most advanced chip manufacturing equipment is surging, thanks to the AI boom.
Analyst Charles Shum noted that TSMC's preliminary sales for the third quarter reached NT$990 billion (approximately $33.05 billion), exceeding guidance expectations and reflecting strong demand for AI and iPhone chips, suggesting that its gross margin will be at the high end of the forecast range of 55.5%-57.5% This growth momentum is expected to continue into the fourth quarter, when strong orders for Apple's A19 and NVIDIA's Blackwell chips should largely offset typical seasonal impacts and tariff-related resistance. This may lead to a slight decline compared to the third quarter, but the drop will be less than the 11% annual guidance growth rate.
Taiwan Semiconductor's monthly sales rebound from summer slump
Taiwan Semiconductor's CEO C.C. Wei has repeatedly reaffirmed confidence in the sustainability of AI demand. However, in July, he warned about the uncertainties brought by tariffs from the Trump administration and overall geopolitical tensions.
The company is expanding in the U.S. partly to mitigate such risks. It has committed to investing $165 billion to expand its manufacturing operations in Arizona, which is part of its global expansion plan (also covering Europe and Japan)
