TSMC raises revenue forecast on strong AI demand

TSMC, the world's biggest producer of advanced chips, raised its full-year revenue forecast on Thursday on a bullish outlook for spending on artificial intelligence, after posting a record profit that blew past market estimates. The strong results underscore the continued faith in AI, brushing off at least for now concerns about a bubble.
TSMC said it expects robust artificial intelligence demand to continue, as it raised its 2025 revenue guidance to mid-30% growth in US dollar terms from around 30%, and maintained its forecast for capital spending at up to $42 billion for 2025.
'AI demand actually continues to be very strong – more strong than we thought three months ago,' CEO C.C. Wei told an earnings call. 'We are also happy to see continuous strong outlook from our customers,' he added. 'In addition, we directly receive very strong signals from our customers' customers requesting the capacity to support their business.'
There has been a flurry of mega deals between AI firms and chipmakers, notably by OpenAI with Nvidia, AMD, and Broadcom in the past month or so to build $1 trillion or more in data center capacity. That portends more demand for chips, which make up a significant portion of the cost of data centers. Nvidia, AMD, and Broadcom all rely on TSMC for chip production.
The multi-billion dollar investment announcements have raised concerns about the formation of a bubble reminiscent of the dotcom boom and bust, with securities investors on guard for signals that demand is tailing off.
Recent company announcements indicate demand is resilient. The head of Australia's Macquarie Asset Management, which sold its Aligned Data Centers business in a deal worth $40 billion, said on Thursday the sale was not a sign the global data center boom had peaked.
Taiwan Semiconductor Manufacturing Co, whose customers also include iPhone maker Apple, posted a 39.1% jump in third-quarter net profit. TSMC said net profit for July-September climbed to T$452.3 billion ($14.76 billion), well ahead of a T$417.7 billion estimate from analysts.
'We are still very comfortable that the demand on leading-edge semiconductors is real. TSMC needs to work very hard to narrow the gap,' Wei said.
Trump's trade policies and threats to put tariffs on semiconductors have created uncertainty. Still, Wei said even if the China market was 'not available,' 'I still think the AI's growth will be very dramatic.' — Reuters