Taiwan Semiconductor's December revenue surged by 57.8%! Pre-market rose over 2% at one point

On January 10, TSMC announced its revenue report for December 2024. Benefiting from the ongoing AI boom, its revenue exceeded market expectations.

Data shows that TSMC's consolidated revenue for December 2024 was approximately NT$ 278.163 billion, an increase of 0.8% from the previous month and a 57.8% increase year-on-year;

The cumulative revenue from January to December 2024 was approximately NT$ 2,894.38 billion, a 33.9% increase compared to the same period last year, marking the highest annual sales since its listing in 1994.

TSMC's stock rose over 2% in pre-market trading but has since fallen back to 1.38%, while semiconductor stocks such as NVIDIA and AMD generally declined.

According to calculations, TSMC's overall revenue for the fourth quarter (October to December) reached NT$ 868.42 billion (approximately USD 26.36 billion), easily surpassing market forecasts. Analysts generally expected the company's fourth-quarter revenue to be NT$ 853.57 billion (approximately USD 25.90 billion). This aligns with TSMC's statement during its October earnings call, predicting fourth-quarter revenue between USD 26 billion and USD 26.9 billion.

TSMC's growth is primarily attributed to strong demand for AI chips, especially from NVIDIA, as well as continuous improvements in smartphone semiconductors.

Brady Wang, Deputy Director of Counterpoint Research, stated, "TSMC has greatly benefited from strong AI demand."

He noted that TSMC's capacity utilization for its 3nm and 5nm processes (the most advanced chips) has consistently been "over 100%." Demand for AI graphics processing units (GPUs) (such as those designed by NVIDIA) and other AI chips is driving this demand.

As a chip foundry for tech giants like NVIDIA and Apple, TSMC's performance growth reflects the active investments of companies like Alphabet and Microsoft in the AI field. Since the explosive popularity of ChatGPT, TSMC's stock price has doubled, and its market value has surpassed USD 1 trillion, indicating that AI is driving the semiconductor industry into a new phase of rapid growth. Meanwhile, related companies like Hon Hai Precision are also benefiting from the growth in AI hardware demand, and Microsoft plans to invest heavily in building data centers.

However, there are also concerns in the market. Overcapacity, power shortages, and other issues may become bottlenecks for development. Additionally, the lack of killer AI applications could lead to idle server capacity. Besides NVIDIA and the AI sector, TSMC also faces uncertainties in the global tech market and geopolitical issues. Nevertheless, TSMC's gross margin is expected to reach a new high.

Morgan Stanley predicts that due to seasonal effects from the iPhone, TSMC's revenue in the first quarter may decline by 5%. Nonetheless, the company expects revenue to grow for the full year, although the growth rate may be below 20% Analyst Charlie Chan stated that Taiwan Semiconductor typically adopts a conservative performance guidance.

Taiwan Semiconductor will release its financial report on January 16 in the afternoon and hold a conference call.

Analysts believe that investors should focus on four aspects during the upcoming financial report conference call: how the expansion of CoWoS advanced packaging capacity will affect future AI chip demand; whether the capacity increase at the Arizona wafer plant in the United States can meet the needs of companies like Apple and NVIDIA; whether the weakening demand for mature nodes will put pressure on profits; and whether the capital expenditure plan for 2025 can reflect Taiwan Semiconductor's confidence in the N2 node