Chipmaker Taiwan Semiconductor Manufacturing (TSM), or TSMC, reported a remarkable 57.8% year-over-year growth in December sales to NT$278.16 billion ($8.44 billion). This strong performance was driven by the high demand for advanced AI chips, fueled by increased spending on data centers and AI infrastructure.
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In the fourth quarter, TSMC achieved revenue of NT$868.46 billion (US$26.3 billion), up 34.4% year-over-year from NT$625.53 billion in the same period last year. Meanwhile, net revenue reached NT$2.9 trillion ($87.8 billion) for the full year 2024, reflecting a 33.9% increase year-over-year and beating the company’s growth expectations of 30%.
Investors should note that TSMC will release its full fourth-quarter earnings report and provide future guidance on January 16.
AI Demand Drives TSMC’s Success
The boom in the AI sector has largely increased the demand for advanced microchips, which are essential to power AI applications and infrastructure. This upsurge has significantly boosted TSMC’s revenues.
Further, tech giants like Apple (AAPL) and Nvidia (NVDA) rely on TSMC’s cutting-edge chips for their latest products. It is worth noting that high demand from these companies has aided TSMC’s revenue growth.
TSMC Focuses on Geopolitical Expansion Efforts
To maintain its strong position in the AI space, TSMC is actively working to expand its global manufacturing footprint to ensure supply chain resilience and mitigate risks. By investing in new facilities in the U.S. and bolstering its presence in other regions, TSMC aims to meet the growing demand for its advanced semiconductor technologies and fortify its strong market position.
These efforts are particularly important as geopolitical tensions between the United States and China continue to escalate. In this regard, the U.S. government ordered TSMC to cut the supply of its 7-nanometer chips and smaller chips to China in November 2024.
Is TSM a Buy, Sell, or Hold?
Turning to Wall Street, TSM has a Strong Buy consensus rating based on five unanimous Buys assigned in the last three months. At $232.50, the average TSMC price target implies 12.25% upside potential. Shares of the company have gained 11.49% over the past three months.
