TSMC forecasts 2025 sales growth of up to 26%

Taipei, Jan. 16 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, on Thursday forecast sales in 2025 will grow by up to 26 percent from a year earlier, beating estimated growth of around 10 percent for the semiconductor industry as a whole.

Speaking at an investor conference held after the market closed, TSMC Chairman C.C. Wei (魏哲家) said the semiconductor industry benefited from strong global demand for artificial intelligence applications in 2024, although demand in other fields was moderate, so sales in the semiconductor industry, including manufacturing, assembly and testing and photomasking, grew only 6 percent.

TSMC posted a new high of NT$2.89 trillion (US$87.58 billion) in consolidated sales in 2024, up 33.9 percent from a year earlier.

Wei said TSMC's sales growth is forecast to range between 24-26 percent in 2025 in U.S. dollar terms, as AI continues to serve as a driver to the chipmaker's growth.

With inventories returning to healthy levels in 2025, Wei said, the entire semiconductor industry will see sales growth hit 10 percent but that will be dwarfed by TSMC's expected growth.

Wei said TSMC's compound annual growth rate (CAGR) in sales is expected to come close to 20 percent from 2024-2029 in U.S. dollar terms, riding the increase in demand for high performance computing devices, smartphones, the Internet of Things and automotive electronics.

Before the investor conference, TSMC announced net profit hit a new high of NT$1.17 trillion, up 39.9 percent from a year earlier.

Also at the investor conference, TSMC Chief Financial Officer Wendell Huang (黃仁昭) said despite continued growth in AI demand in the first quarter, smartphone sales could be affected by slow season effects. The company is likely to see consolidated sales ranging from US$25.0 billion to US$25.8 billion, with the median figure expected to fall about 5.5 percent from the previous quarter.

In the first quarter, TSMC's gross margin -- the difference between revenue and cost of goods sold -- is forecast to hit 57-59 percent, with the median figure likely to fall by one percentage point from the previous quarter, Huang said.

Although operations of its overseas fabs, the hike in electricity rates and the transition to advanced 2 nanometer processes from 3nm and 5nm technologies are expected drag down TSMC's gross margin, over the longer term, Huang said the chipmaker will maintain its gross margin above 53 percent.

Meanwhile, TSMC is expected to spend US$38.0 billion to US$42.0 billion in 2025, up 27.5-41 percent from a capex of about US$29.8 billion in 2024, Huang said.

Huang, who has reiterated that TSMC will draft its capex budget based on client needs over the next few years, said 70 percent of the 2025 capex will be used in advanced process development with 10-20 percent dedicated to specialty technology development and another 10-20 percent to advanced IC assembly and testing as well as photomasking development.

Despite the higher capex budget, TSMC has promised to maintain its policy of giving stable cash dividends to shareholders, he said.

Asked whether TSMC has seen a drop in orders for 3D Chip-on-Wafer-on-Substrate (CoWoS) IC packaging services used in AI chip manufacturing, Wei said that was a rumor, adding the company will do its best to meet demand for particular services.

Wei said sales of chips used in AI accelerators are expected to rise an additional 100 percent in 2025, forecasting that the CAGR for AI accelerators will hit 45 percent from 2024-2029.