Shares of Taiwan Semiconductor Manufacturing (TSMC) surged by 7.5% in premarket trading in New York following the release of their 2025 sales and capital expenditure forecasts, which exceeded Bloomberg Consensus estimates.
TSMC anticipates revenue between $25 billion and $25.8 billion for the first quarter, surpassing the Bloomberg Consensus estimate of $24.3 billion. The company also expects capital expenditure to range from $38 billion to $42 billion for the year, significantly higher than the $35.2 billion estimate.
TSMC’s Projections for the Year
- Estimated capital expenditure: $38 billion to $42 billion, compared to the Bloomberg Consensus estimate of $35.15 billion
TSMC’s Forecast for the First Quarter
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Projected sales: $25 billion to $25.8 billion, exceeding the estimate of $24.43 billion
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Gross margin: 57% to 59%, estimated at 56.9% * Operating margin: 46.5% to 48.5%, estimated at 46.4%
Despite Apple’s lackluster AI iPhone launch, TSMC reported fourth-quarter sales that exceeded expectations.
TSMC’s Fourth Quarter Earnings
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Net income: NT$374.7 billion, up 57% year-over-year, surpassing the estimate of NT$369.84 billion
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Gross margin: 59% versus 57.8% quarter-over-quarter, estimated at 58.5%
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Operating profit: NT$425.71 billion, up 64% year-over-year, exceeding the estimate of NT$411.42 billion
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Operating margin: 49% versus 47.5% quarter-over-quarter, estimated at 48.1%
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Sales: NT$868.46 billion, up 39% year-over-year, compared to the estimate of NT$855.34 billion
TSMC’s 2024 Performance
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Sales: NT$2.89 trillion, up 34% year-over-year, exceeding the estimate of NT$2.88 trillion
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R&D expenses: NT$204.18 billion, up 12% year-over-year, compared to the estimate of NT$205.98 billion
Goldman’s Nelson Armbrust highlighted the positive impact of TSMC’s forecasts on the semiconductor industry, with Tokyo Electron and Advantest seeing stock increases. He emphasized the strong AI demand driving TSMC’s success.
William Chan from the Asia team noted the low cost of TSMC puts and the discounted implied volatility in Taiwan compared to US ADR. He recommended investors consider buying insurance to protect their TSMC holdings.
In 2024, TSMC shares in New York soared by nearly 90%, marking the largest annual percentage gain since 1999.
Bloomberg Intelligence analyst Charles Shum highlighted the factors contributing to TSMC’s optimistic revenue outlook for 2025, including robust AI chip demand, new smartphone chips, AI PCs, and potential outsourcing orders from Intel and WiFi 7 chips.
Despite the disappointing AI smartphone launch with iPhones, TSMC remains confident in its future growth prospects.
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