Strong Demand for AI Chips is Expected to Boost TSMC’s First-quarter Profit by 5%

Taiwan Semiconductor Manufacturing Co., the leading manufacturer of cutting-edge chips for AI applications, is anticipated to announce a 5% increase in first-quarter earnings on Thursday as a result of robust demand.

With clients like Apple and Nvidia, the largest contract chipmaker in the world, TSMC, has profited from a wave of artificial intelligence (AI) innovation that has propelled its stock to all-time highs and helped it weather the slowdown in pandemic-related demand for electronics.

Based on 22 analysts’ T$217.2 billion ($6.71 billion) estimates, TSMC is expected to report a net profit for the quarter that ended on March 31. More weighting is assigned by SmartEstimates to analyst forecasts that are more reliably accurate.

In contrast, the net profit for the first quarter of last year was T$206.9 billion.

Last week, TSMC revealed first-quarter revenue growth of 16.5%, exceeding both market estimates and the company’s own guidance.

Vice President Eric Yao of Taiwan’s Eastspring Investments, which oversees approximately T$90 billion in client assets in Taiwanese stocks, said that TSMC’s prospects of sustaining its lead in advanced process technologies were brightened by the $6.6 billion in U.S. subsidies for its new Arizona plants.

He referred to two competitors who wish to challenge the company’s dominance, saying, “TSMC will likely continue to lead in that front, and Intel and Samsung will not have much chance to catch up.”

As it attempts to reclaim the technological lead it lost to TSMC in recent years—the latter of which also revealed last week that it would construct a third fab in Arizona—Intel revealed increasing operating losses for its foundry business this month.

Analysts at Fubon Securities stated that they anticipated TSMC to update its forecast for AI demand in upcoming quarters.

“TSMC previously indicated that AI could account for high-teens of its revenue by 2026, but based on our calculation, we think the target could be reached earlier in 2025.”

The price of shares in the most valuable company in Asia has increased due to the AI boom; TSMC’s Taipei-listed stock has risen 36% this year to a record high, while the market has gained 14% overall.

On Thursday, TSMC is scheduled to host an earnings call at 0600 GMT.