TSMC closes the year on strong footing as AI demand offsets chip sales

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported stronger-than-expected revenue for the fourth quarter, showing the continued strength of global demand for artificial intelligence-related chips and easing concerns that investment in AI infrastructure may be running ahead of actual adoption.

AI replaces fading consumer demand

TSMC said revenue for the October to December period rose 20.45% from a year earlier, reflecting strong demand for chips used in AI applications.

The company has been a major beneficiary of rapid investment in artificial intelligence, particularly for servers and high-performance computing.

This surge has more than offset the cooling of pandemic-led demand for chips used in consumer devices such as tablets.

As households scaled back spending on electronics, data centre operators and technology firms increased orders for advanced processors, shifting the balance of the chip industry.

Revenue beats market expectations

Fourth-quarter revenue reached T$1.046 trillion, or $33.11 billion, based on calculations from monthly data released by the company.

In the same period, the previous year, the company posted T$868.46 billion.

The figure exceeded a LSEG SmartEstimate of T$1.036 trillion, or $32.79 billion, which was drawn from forecasts by 20 analysts.

It also landed within the guidance range of $32.2 billion to $33.4 billion that TSMC issued in October during its previous earnings call.

The company provides guidance only in US dollars, reflecting its global customer base.

Key customers and supply chain impact

TSMC’s customer list includes some of the most influential names in technology, such as Nvidia and Apple.

Nvidia’s processors are widely used in AI servers, while Apple relies on TSMC for manufacturing its most advanced chips.

The growing importance of AI workloads has reinforced TSMC’s role as a critical supplier, not just for individual firms but for the wider technology ecosystem.

As companies race to expand AI capabilities, demand for cutting-edge manufacturing processes has intensified.

Earnings update and market performance

TSMC is scheduled to report full fourth-quarter earnings on January 15.

The company is expected to provide updated guidance for the current quarter and the full year, including details on capital expenditure plans and revenue growth expectations.

These disclosures will be closely watched for signals on how aggressively TSMC plans to invest in capacity to support sustained AI-driven demand.

The revenue update follows a strong year for the company’s shares.

TSMC’s Taipei-listed stock rose 44.2% last year, outperforming the broader Taiwan market, which gained 25.7%.

The performance reflects investor confidence in the company’s ability to adapt to shifting demand trends.

Multiple brokerages, including JPMorgan Chase, have raised their price targets on TSMC since the start of the year, citing expectations of continued revenue growth and improving profitability.

Elsewhere in the supply chain, Foxconn, the world’s largest contract electronics maker and Nvidia’s biggest server producer, also reported strong results.

Foxconn posted fourth-quarter sales of T$2.6028 trillion, or $82.20 billion, highlighting robust demand across the AI hardware sector.

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