In 2025, TSMC expects another banner year
Taiwan Semiconductor Manufacturing Company is expecting a banner year in 2025, thanks to strong demand from AI clients and for its high-performance computing devices (HPCs) and the launch of its two-nano chip.
On October 18, its share price in Taipei reached a record NT$1,085 (US$33.77), up from the previous record of NT$1,080 on July 11. That gave the firm a market capitalisation of US$874 billion, the highest of any company listed in Asia.
This followed release of its figures for the first three quarters of 2024, with consolidated revenue of NT$759.69 billion, net income of NT$325.26 billion, and diluted earnings per share of NT$12.54 (US$1.94 per ADR unit). It is also listed on the New York stock exchange. Compared to the same period in 2023, third quarter revenue rose 39.0 per cent and net income and diluted EPS both rose 54.2 per cent. For the full year of 2024, the firm has forecast year-on-year growth of nearly 30 per cent in U.S. dollar terms.
On October 26, there was a mood of triumph at its annual sports day in Hsinchu, northwest Taipei, where the company is based.
Star of the show was founder Morris Chang, 93, who retired from the management in 2018. “This is my happiest day of the year,” he said. “I see the fighting spirit, unity and sporting prowess of my colleagues. This has been a record-breaking year, but the most serious challenges are ahead of us.
“Globalisation and free trade are dead, but we achieved record results this year despite that. Our three core values are leading technology, excellent manufacturing and the trust of our customers,” he said. The company counts Apple and Nvidia among its clients.
In his speech, chairman C. C. Wei said that development of its two-nanometer chip, the most advanced in the world, was proceeding smoothly and would enter mass production in 2025. The A16 process, an upgraded version of the two-nanometer process, would start commercial production in the second half of 2026.
Wei announced that all 60,000 Taiwan-based staff who held non-managerial roles would receive NT$20,000 in a sports day bonus as a small gift for their contribution. This will cost the firm a total of NT$1.2 billion.
He also gave a favourable report of the three giant investments TSMC is making overseas. Japan Advanced Semiconductor Manufacturing in Kumamoto has already gone into production. Work on the ESMC in Dresden and its fab in Phoenix, Arizona is proceeding well, he said.
All three projects are receiving enormous financial incentives from the three governments eager to have advanced semiconductors made on their territory. The Arizona factory is due to win US$6.6. billion in grants and US$5 billion in loans from the U.S. government, under the 2022 CHIPS and Science Act.
For TSMC, this is both making a global manufacturing footprint and insurance against a cut in production in Taiwan, either as a result of a result of earthquake or other natural disaster or a blockade or invasion by China.
On October 23, the Industrial Technology Research Institute of Taiwan (ITRI) forecast that the production value of the island’s semi-conductor industry would grow by an annual 16.5 per cent in 2025 to reach NT$6.17 trillion, driven by demand for AI and HPC devices such as servers and data centres.
That will be faster than the 12.5 per cent growth in production value for the global semi-conductor industry, ITRI said.
Terry Fan, an analyst at ITRI, said that the rise of generative AI was stimulating demand for HPC devices powered by advanced chips. “More than half of TSMC’s wafer revenue comes from HPC chips, he said. There will also be strong demand for smart-phones, PCs and other consumer electronics.
TSMC is the pride of Taiwan. The firm was established on September 5, 1994. Since then, its market value has increased 367-fold.
Of its shares, 73.88 per cent are held by foreign investors, including the Singapore Government Fund and the Norway Sovereign Wealth Fund. Other large investors are Fubon Life Insurance and Taiwan’s National Development Fund, an original investor, with 6.38 per cent.
It sits at the top of the island’s IT sector which employs about 20 per cent of the workforce and pays monthly wages in excess of NT$100,000, double the national average.
Founder Morris Chang is not a native Taiwanese. He was born in Ningbo and received his primary education in Hong Kong. In 1949, he moved to the United States to attend Harvard University. He had a distinguished 25-year career with Texas Instruments, before the Taiwan government recruited him to join ITRI as chairman and president.
This led him to found TSMC.
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