TSMC upbeat on outlook as robust AI demand offsets tariff uncertainty

TAIPEI – Taiwan Semiconductor Manufacturing Company (TSMC) gave a bullish outlook for the year on robust demand for AI applications, adding that while there was uncertainty over US tariffs, the world’s largest contract chip manufacturer had yet to see any change in customer behaviour.

The Taiwanese company, a bellwether for the global chip industry, stood by its annual outlook for sales and capital spending on April 17 and forecast artificial intelligence (AI) chip revenue to double.

The forecast comes despite a slew of headwinds: the tightening of US export controls on chips for China, including a recent decision to curb sales of a key Nvidia product; threats from US President Donald Trump to put tariffs on semiconductors; as well as his planned broader reciprocal levies on imports.

“We certainly are mindful of the potential impact from all the recent tariff announcements, especially the impact on end market demand,” TSMC chief executive C.C. Wei told an earnings call.

“Having said that, we have not seen any change in our customers’ behaviour so far. So we are sticking to our forecasts,” he said.

TSMC is not getting involved in tariff talks, added Mr Wei, who in March announced an additional US$100 billion (S$131 billion) investment in the United States while standing next to Mr Trump at the White House.

“This kind of tariff discussion is between countries. We are a private company,” he said.

Mr Wei also said TSMC is not in talks with other companies about forming joint ventures, without elaborating. His comments follow media reports that TSMC could take a stake in a joint venture with floundering US chip company Intel.

Chief financial officer Wendell Huang said capital expenditure for 2025 was expected to be between US$38 billion and US$42 billion, the same forecast given on the last earnings call, in January.

For the second quarter, it expects revenue of between US$28.4 billion and US$29.2 billion, outpacing the US$20.8 billion for the same period a year earlier; and for the full year, it expects revenue growth roughly midway between 20 per cent and 30 per cent.

TSMC is in the strongest position among chip companies to pass on any tariff-related price increases to customers, said Allspring Global Investments portfolio manager Gary Tan.

Its net profit for January-March climbed 60 per cent year on year to NT$361.6 billion (S$14.6 billion), its fourth straight quarter of double-digit growth and comfortably beating a NT$354.6 billion LSEG SmartEstimate.

In a sign that US controls on chip exports to China are having their desired effect, TSMC’s revenue from China dropped to 7 per cent of its total sales versus 9 per cent a year earlier, while North America generated 77 per cent, up from 69 per cent.

TSMC’s planned US investment, now at US$165 billion, is central to the US chip industry, and taking more of its production to US soil would solve a major supply chain risk for customers that include Qualcomm and Advanced Micro Devices.

Like many other chip stocks, TSMC’s shares have fallen in 2025. Its Taipei-listed shares are down some 20 per cent, their worst start to a year in at least three decades as foreign investors flee.

Foreign investors have sold US$8.66 billion worth of TSMC shares so far in 2025 after buying US$2 billion in 2024 and US$10.4 billion in 2023, Goldman Sachs said in a report.

Other factors that have sapped sentiment include investor jitters about spending on AI infrastructure and competitive threats such as Chinese start-up DeepSeek’s launch of cheaper AI models.

Though its earnings report came after the market close in Taipei, the upbeat results helped lift shares of Japanese technology firms and some European companies.

On April 16, ASML, the world’s biggest supplier of computer chipmaking equipment, said tariffs were increasing uncertainty around its outlook for 2025 and 2026, but stood by its annual guidance. REUTERS