What to Watch When TSMC Reports Q4 2024 Earnings

TradingKey - Semiconductors have been in the news for the past two years on the back of the Artificial Intelligence (AI) revolution. That’s because the chips are powering everything AI – from data centres to large language models (LLMs).

While certain chip companies have stolen the spotlight, the world’s largest manufacturer of semiconductors – Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) – quietly continues to notch up record profits. 

Also known as TSMC, the company has a staggering 90% market share when it comes to producing cutting-edge chips, such as the ones required to run LLMs and that are needed for generative AI.  

The Taiwanese firm is always one of the first big tech players to report quarterly earnings, with TSMC set to report its latest Q4 2024 and full-year 2024 earnings on Thursday (16 January), before the US market opens. Here’s what investors should be watching.

Early revenue numbers bode well

As is typically the case, TSMC actually reports its latest monthly revenue numbers (for December 2024) a week before its full earnings release.

In December, TSMC posted revenue of NT$278.2 billion (US$8.4 billion) in December 2024. While this was only up 0.8% sequentially (or month-on-month) from November 2024, it was a sizeable increase of 57.3% year-on-year from December 2023.

For the whole of Q4 2024, revenue of US$26.3 billion was a 39% year-on-year increase from the same period a year earlier. Overall revenue growth of 34% for the whole of 2024 actually outpaced TSMC’s own projection of a 30% expansion in revenue for the year.

That highlights that the AI trend appears to be going in the right direction. Of course, more clear numbers (beyond just the top line) will be forthcoming on Thursday, including operating margins and management commentary on the outlook for the company in 2025.

Will Nvidia’s Blackwell have an impact?

While the market’s AI darling – Nvidia Corp (NASDAQ: NVDA) – has been grabbing headlines with its new Blackwell AI chip, investors will also be looking out for whether this has any positive knock-on effect for TSMC.

That’s because TSMC is the go-to production partner with Nvidia and, as Nvidia’s CEO Jensen Huang recently commented, demand for the Blackwell chip has been robust – so much so that TSMC doesn’t actually have the capacity available to meet all the demand for it.

Investors will also be watching to see how the recent chip export restrictions, placed on Nvidia by the US government, may affect TSMC’s production guidance (if at all). In terms of expectations heading into the earnings print, analysts are projecting TSMC to report a quarterly profit of US$11.4 billion.

Back at its Q3 2024 earnings call, TSMC had guided for Q4 2024 revenue of between US$26.1 billion and US$26.9 billion, so the top line number that was released last week came within expectations. 

It will be interesting to see whether TSMC’s 3 nanometre (nm) and 5nm chips start to take up a bigger share of overall revenue.

Barometer for broader tech space

As other big tech companies start to report earnings at the end of January, TSMC is always taken as a barometer on the health of the broader technology space – given its importance in producing crucial semiconductors.   

TSMC’s New York-listed American Depository Receipts (ADRs) soared nearly 10% on the back of its Q3 2024 earnings so investors will be hoping for a similar response on Thursday. In 2024, TSMC’s ADRs rose around 80% and the company is now worth just over US$1 trillion.

So far in 2025, TSMC shares are up 2.1%, outperforming the S&P 500 Index’s 1.1% year-to-date decline.