Taiwan Semiconductor Manufacturing Company (TSM.US), the world's largest contract semiconductor manufacturer (maker for giants such as Nvidia and Apple), ended a successful 2024 with a record fourth quarter, driven by a surge in demand for artificial intelligence (AI) technologies.
Highlights for 2024:
- Net income: up 57% year-on-year to NT$374.7 billion (US$11.4 billion), exceeding analysts' expectations.
- Revenue: up 39% year-on-year to NT$868.46 billion in the fourth quarter, raising the annual figure to NT$2.89 trillion, a 34% jump from 2023.
- Gross margin: maintained at a high level of 59% throughout the year.
- Investment in research and development: up 12% year-on-year to NT$204.18 billion.
- Capital spending (Capex): invested NT$29.76 billion in 2024, exceeding original estimates.
Company beats consensus for EPS and revenue. Source: Bloomberg Finance LP, XTB
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Open real account TRY DEMO Download mobile app Download mobile appQ1 2025 forecast:
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Sales: expected in the range of $25 billion to $25.8 billion, beating analysts' forecasts slightly.
- Gross margin: forecast at a range of 57% to 59%.
- Operating margin: expected in the range of 46.5% to 48.5%.
The company is showing solid results, with record sales for Q4 24. Bloomberg's expectations for Q1 are lower than the company's guidance, which expects a range of $25-28.5 billion. Source: Bloomberg Finance LP
TSMC remains optimistic despite geopolitical tensions over the US-China chip war. The company is investing heavily through 2025, with projected capital expenditures of $38 billion to $42 billion, exceeding analysts' expectations. This represents a continued commitment to expanding production capacity and maintaining a technological edge.
The focus on AI chip production is expected to remain a key growth driver. While recent US restrictions on the export of advanced chips to China pose a potential challenge, it is worth noting that TSMC's strong market position and technological capabilities will help it weather any short-term disruption.
In addition, it's worth mentioning that TSMC is coping with pressure to move production outside Taiwan by building new factories in the US and Japan, among others. This move is aimed at geographic diversification and securing access to markets. This, of course, in part offsets the risks associated with tariffs and the tense situation with China. The company's shares on the Taiwanese trading floor are up nearly 4%. However, it is worth remembering that the more liquid market for the company is the NYSE. In after-hours trading, but before results were known, the company gained 1.3%, extending the gains from Wednesday's session.
