TSMC raises 2025 outlook in big boost for AI demand hopes

Taiwan Semiconductor Manufacturing Co raised its outlook for 2025 revenue growth, shoring up investors’ confidence in the momentum of the global artificial intelligence (AI) spending spree.

The world’s biggest contract chipmaker on July 17 forecast sales growth of about 30 per cent in US dollar terms in 2025, up from mid-20 per cent previously. That reinforced expectations that tech firms from Meta Platforms to Google will keep spending to build the data centres essential to AI development. Nasdaq stock index futures swung to gains.

TSMC’s move underscores resilient demand for high-end chips from the likes of Nvidia and AMD, which is outpacing production capacity. Chief executive C.C. Wei, seeking to dispel persistent speculation that tech firms may curtail spending, affirmed during a shareholder meeting in June that AI orders continue to run hot.

This is “supporting the AI value chain, and AI optimism still holds”, said Mr Billy Leung, investment strategist at Global X ETFs in Sydney. “For investors, TSMC results again ease fears of an AI slowdown. Margins hold, demand outlook good, generally reinforces the AI build-out is still well under way.”

Investors have piled back into AI-linked companies, shaking off a funk that settled in after China’s DeepSeek cast doubt on whether the likes of Amazon needed to spend that much money on data centres. Last week, Nvidia became the first company in history to hit a US$4 trillion (S$5.14 trillion) valuation, underscoring investors’ renewed enthusiasm for companies like TSMC that are key to building the infrastructure for AI.

TSMC was not hiking its outlook on news that the US is prepared to grant Nvidia licences to export its H20 AI chip to China, Mr Wei told reporters. While that resumption in sales was positive for the industry, it was too early to quantify the impact, he added.

A day before TSMC’s results, chipmaking gear supplier ASML Holding triggered anxiety across markets by walking back its growth forecast for 2026. Geopolitics and the global economy are sources of “increasing uncertainty”, CEO Christophe Fouquet said. Its shares dropped more than 1 per cent.

Mr Wei, on July 17, acknowledged the uncertainty stemming from the Trump administration’s tariffs-led assault. The appreciating Taiwanese dollar is also suppressing its financials.

“Looking ahead to the second half of the year, we have not seen any change in our customers’ behaviour so far,” he said in Taipei. “However, we understand there are uncertainties and risks” related to potential tariffs.

TSMC upgraded its forecast after reporting a better-than-expected 61 per cent jump in net income for the June quarter to NT$398.3 billion (S$17.4 billion), keeping intact a streak of beating estimates every quarter since 2021. The company previously posted a 39 per cent surge in revenue.

Revenue from high-performance computing, which includes chips for servers and data centres, now accounts for three-fifths of the company’s revenue, a major change from when TSMC primarily rode the smartphone market. It remains the main chipmaker for Apple.

The company is sticking with plans to spend US$38 billion to US$42 billion upgrading and expanding capacity in 2025. TSMC had earlier pledged to spend another US$100 billion ramping up manufacturing in Arizona, Japan, Germany and back home in Taiwan. BLOOMBERG