TSMC shares soar; company updates Phoenix chip production

Amid swirling geopolitical tensions with China, Taiwan Semiconductor Manufacturing Co. on Thursday said it reported record profits in the fourth quarter of 2024 and is already forecasting strong results for Q1 due to a surge in demand for chips used for artificial intelligence applications.

TSMC reported fourth quarter revenue of $26.88 billion, up 37% year-over-year and an increase of 14.4% from the previous quarter, ahead of analysts’ expectations. The company forecasts Q1 revenue will land between $25 billion and $25.8 billion.

The company’s shares, which are traded in the U.S. as depository receipts, roared out of the gate in trading on Thursday, almost reaching $222 before slipping back to close at $215.25, a 4% gain in heavier than usual trading.

As expected, TSMC Chief Executive and Chairman CC Wei reiterated that the company is on track to ramp up to full commercial production of semiconductors at its newly minted north Phoenix chip factory. Last September, the Business Journal had reported that TSMC’s Arizona factory, or fab, reached a trial production yield rate similar to the company’s yield rate at its Fab 18 in Tainan, Taiwan, which had put the fab ahead of schedule.

As the Business Journal previously reported in December, TSMC (NYSE: TSM) is on track to begin mass production at its Arizona fab site in Q1 of this year while operations are expected to begin at TSMC’s second Phoenix factory in 2028. The company’s second fab will produce 2- and 3-nanometer process technologies for AMD, Apple, Nvidia and Qualcomm.

Last November, the White House finalized its award of a $6.6 billion CHIPS Act grant to TSMC with plans to disburse $1 billion to the chipmaker by the end of 2024 to support its Arizona fab.

TSMC CEO: Phoenix production ahead of schedule

In his statement Thursday, Wei reiterated that the production at the first factory was ahead of schedule.

“Our first fab has already entered high volume production in Q4 ’24, utilizing N4 process technology, with a yield comparable to our fabs in Taiwan,” Wei said. “We expect a smooth ramp up process, and with our strong manufacturing capability and execution, we are confident to deliver the same level of manufacturing quality and reliability from our fab in Arizona, as from our fabs in Taiwan.”

Wei added that the company’s plans for a second and third Arizona fab remain on track.

“These fabs will utilize even more advanced technologies such as N3, N2 and A16, based on our customer needs,” he said. “Thus, TSMC will continue to play a critical and integral role in enabling our customers’ success, while remaining a key partner and enabler of the U.S. semiconductor industry.”

Barron’s reported that TSMC’s fastest-growing area was in its high-performance computing (HPC) segment, which includes AI chips. Its HPC revenue climbed 58% in Q4 compared to a year-earlier. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 74% of TSMC’s total silicon wafer revenue. Wei said revenue from AI-related servers and processors is expected to double in 2025 after more than tripling last year to account for 18% of total revenue.

Separately, TSMC could face hurdles in 2025 now that the U.S. has put more technology restrictions on China. Reuters reported that the Biden administration said this week it would further restrict AI chip and technology exports. Meanwhile, the inauguration of President-Elect Donald Trump on Jan. 20 also brings uncertainty with his oft-repeated plan to impose further trade restrictions and tariffs on China.