[TAIPEI] TSMC gave a bullish outlook for the year on robust demand for AI applications, adding that while there was uncertainty over US tariffs, the world’s largest contract chip manufacturer had yet to see any change in customer behaviour.
The Taiwanese company, a bellwether for the global chip industry, stood by its annual outlooks for sales and capital spending on Thursday (Apr 17) and forecast artificial intelligence (AI) chip revenue to double.
Its Frankfurt-listed shares leapt 5 per cent in morning trade.
The forecast comes despite a slew of headwinds: the tightening of US export controls on chips for China including a recent decision to curb sales of a key Nvidia product, threats from US President Donald Trump to put tariffs on semiconductors as well as his planned broader reciprocal levies on imports.
“We certainly are mindful of the potential impact from all the recent tariff announcements, especially the impact on end market demand,” Taiwan Semiconductor Manufacturing Co’s chief executive CC Wei told an earnings call.
“Having said that, we have not seen any change in our customers’ behaviour so far. So we are sticking to our forecasts,” he said.
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TSMC is not getting involved in tariff talks, added Wei, who last month announced an additional US$100 billion investment in the US while standing next to Trump at the White House.
“This kind of tariff discussion is between countries. We are a private company,” he said.
Wei also said that TSMC is not in talks with other companies about forming joint ventures, without elaborating. His comments follow media reports that TSMC could take a stake in a joint venture with floundering US chip company Intel.
Chief financial officer Wendell Huang said capital expenditure for this year was expected to be between US$38 billion and US$42 billion, the same forecast given on the last earnings call, in January.
For the second-quarter, it expects revenue of US$28.4 billion to US$29.2 billion, outpacing US$20.8 billion for the same period a year earlier and for the full year it expects revenue growth roughly midway between 20 per cent and 30 per cent.
TSMC is in the strongest position among chip companies to pass on any tariff-related price increases to customers, said Gary Tan, a portfolio manager at Allspring Global Investments.
Its net profit for January-to-March quarter climbed 60 per cent year-on-year to NT$361.6 billion (S$14.6 billion), its fourth straight quarter of double-digit growth and comfortably beating a NT$354.6 billion LSEG SmartEstimate.
In a sign that US controls on chip exports to China are having their desired effect, TSMC’s revenue from China dropped to 7 per cent of its total sales versus 9 per cent a year earlier, while North America generated 77 per cent, up from 69 per cent.
TSMC’s planned US investment, now at US$165 billion, is central to the US chip industry and bringing more of its production to US soil would solve a major supply chain risk for customers that also include Qualcomm and Advanced Micro Devices.
Like many other chip stocks, TSMC’s shares have fallen this year. Its Taipei-listed shares are down some 20 per cent, their worst start to a year in at least three decades as foreign investors flee.
Foreign investors have sold US$8.66 billion worth of TSMC shares so far this year after buying US$2 billion last year and US$10.4 billion in 2023, Goldman Sachs said in a report.
Other factors that have sapped sentiment include investor jitters about spending on AI infrastructure and competitive threats such as Chinese startup DeepSeek’s launch of cheaper AI models.
Though its earnings report came after the market close in Taipei, the upbeat results helped lift shares of Japanese tech firms and some European companies.
On Wednesday, ASML, the world’s biggest supplier of computer chip-making equipment, said tariffs were increasing uncertainty around its outlook for 2025 and 2026, but stood by its annual guidance. REUTERS
