TSMC Delivers Record High Q4 2024 Profit: Shares Rise 4%

TradingKeyJan 16, 2025 10:15 AM

TradingKey - For semiconductor companies, there’s a lot of expectation heading into the latest earnings season as the Artificial Intelligence (AI) hype continues.

With the world’s largest manufacturer of semiconductors – Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) – first up in terms of reporting, all eyes were on the largest foundry company to see whether the AI revolution was still ongoing.

TSMC reported its latest results on Thursday (16 January) afternoon, after the Taiwan stock market had closed but before the open of the US market. In pre-market trading, TSMC’s New York-listed ADRs are up 4% as the company beat expectations for its quarterly results.

Here’s what investors should know about the latest numbers from this crucial chip giant.

Revenue driven by AI demand

The market was broadly aware of overall revenue for the period heading into the earnings release but the official number from TSMC for Q4 2024 saw net revenue come in at NT$868.5 billion (US$26.3 billion).

However, it was net income of US$11.4 billion – a record quarter and up 57% year-on-year – for the period that also provided optimism over the future path of growth for the company. For the whole of 2024, 3 nanometre (nm) and 5nm chips – the advanced semiconductors required for AI computing – made up 52% of overall revenue.

That was up significantly from the 39% revenue contribution the two types of chips made towards 2023’s overall revenue. Meanwhile, that share looks like it’s continuing to grow as Q4 2024’s revenue share saw 3nm and 5nm chips contribute 60% of overall revenue.

TSMC quarterly sales (US$ billion) hit new highs on AI demand

A graph of a graph with numbers

Description automatically generated with medium confidence

Source: Bloomberg

It was no surprise to hear from management that this growth was driven by AI demand for chips, with TSMC CFO and Vice President Wendell Huang commenting that, “we observed robust AI demand from our customers throughout 2024.

Huang went on to say that TSMC expects its revenue from AI accelerators to double in 2025 on the back of a robust pipeline of AI-related demand. TSMC tripled its revenue from AI accelerators in 2024 and the ongoing demand suggests that TSMC continues to be the go-to provider of AI chip production.

Strong guidance for current quarter from TSMC

Of course, the market was closely watching projected revenue and guidance for the current quarter (Q1 2025) and this was where TSMC again beat a high bar. The average market consensus was for revenue of US$24.4 billion in the current quarter but TSMC projects revenue of between US$25 billion and US$25.8 billion.

TSMC shares had a blowout year in 2024, with shares trading 80% higher and recording their best year since 1999. However, with president-elect Trump taking office next week, TSMC will have to grapple with what’s likely to be more geopolitical tensions between the US and China.

The company continues to build out capacity in places such as Germany, Japan, and the US but the bulk of the most advanced chips remain predominantly manufactured in Taiwan. Despite all this, TSMC looks set to maintain its dominance in the chip production space.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.