TSMC expects 2025 sales to grow almost 35%

Taipei, Oct. 16 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) on Thursday forecast its 2025 sales will grow by almost 35 percent in U.S. dollar terms, citing strong global demand for artificial intelligence applications -- an upgrade from its 30-percent growth estimate in July.

Speaking at an investor conference, TSMC Chairman and CEO C.C. Wei (魏哲家) said that in addition to strong AI-related demand, other end-user devices also showed signs of a mild recovery.

Before the conference, the world's largest contract chipmaker reported a record third-quarter net profit of NT$452.30 billion (US$14.78 billion), as demand for emerging technologies boosted sales of its advanced processes.

Commenting on the possible impact of U.S. tariff policies, Wei said TSMC's clients have not adjusted their orders, but he warned that higher tariffs could affect demand for consumer and price-sensitive products, adding that the company will remain alert to potential risks.

After discussions with clients, Wei said the compound annual growth rate (CAGR) of TSMC's sales from AI-related chips between 2024 and 2029 is expected to exceed an earlier estimate of 45 percent, reflecting stronger-than-anticipated global demand.

Chief Financial Officer Wendell Huang (黃仁昭) said fourth-quarter sales are projected at US$32.2-33.4 billion, with the midpoint representing a 1 percent decline from the previous quarter. The fourth quarter is typically a slow season for the semiconductor industry.

TSMC's gross margin -- the difference between revenue and cost of goods sold -- is forecast to reach 59-61 percent, with the median point expected to rise 0.5 percentage points, Huang said.

He added that TSMC expects the Taiwan dollar to average NT$30.6 against the U.S. dollar in the fourth quarter, compared with NT$29.91 in the third, meaning a weaker local currency should boost its gross margin.

Higher costs at overseas facilities, however, are likely to trim the company's gross margin by 1-2 percentage points this year -- less than the previous estimate of 2-3 points -- due to economies of scale, Huang said.

With AI demand surging, TSMC has raised its capital expenditure forecast to US$40-42 billion from US$38-42 billion to meet client needs. Huang said 70 percent of capex will go toward advanced process development, 10-20 percent to specialty processes, and 10 percent to high-end IC assembly, testing, photomasking, and other items.

In the third quarter, TSMC's capex reached US$9.7 billion, slightly up from US$9.63 billion in the second quarter and 51.5 percent higher than US$6.4 billion a year earlier. For the first nine months of this year, capex totaled US$29.39 billion, up 58.6 percent year-on-year.