Taiwan Semiconductor Manufacturing Company (TPE: TSMC) revealed its Q4 2024 earnings overnight, showing a 38.8% year-over-year revenue increase to US$26.88 billion (A$43.29 billion).
TSMC's latest report not only showcases its financial strength, but also highlights the broader economic impact of the semiconductor industry.
The company's net income surged by 57% to $11.3 billion, with earnings per share (EPS) reaching $2.24. These impressive results were driven by strong demand for TSMC's advanced 3nm and 5nm chips, which are crucial for artificial intelligence (AI) applications.
Wendell Huang, Senior VP and Chief Financial Officer of TSMC said: “Moving into first quarter 2025, we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.”
Economic effects
With TSMC dominating advanced chip production, Taiwan has emerged as a key player in the global AI boom. Taiwan offers pure-play exposure to AI as TSMC is the only company capable of fabricating Nvidia's cutting-edge chips.
TSMC's robust performance underscores AI technology's growing importance in the global economy. The company's success highlights the semiconductor industry's critical role in powering modern technologies, from AI to autonomous vehicles. However, geopolitical tensions, particularly U.S. export restrictions on high-tech chips, pose significant challenges. TSMC's strategic investments, including a $30 billion facility in Arizona, aim to mitigate these risks and ensure continued growth.
In November last year, TSMC reportedly told Chinese companies it would no longer build AI chips on advanced process nodes of seven nanometres or smaller.
Share price reaction
Following the earnings announcement, TSMC's shares jumped, nearing their all-time high. The positive market reaction reflects investor confidence in TSMC's ability to capitalise on the AI revolution and navigate geopolitical challenges. At the time of writing, TSMC's share price stands at TWD$1,105 (A$54.03), with a market cap of approximately TWD$28.66 trillion (A$1.4 trillion).
