Volkswacht Bodensee - Taiwan's TSMC logs net profit jump on AI boom

TSMC is the world's biggest contract maker of chips used in everything from Apple's smartphones to Nvidia's cutting-edge artificial intelligence hardware.

The company has been a massive beneficiary of the AI revolution that has seen tech giants pour many billions of dollars into chips, servers and data centres.

Some market-watchers fear the bubble of excitement around AI could burst and cause a stock rout, but TSMC's results marked the latest high point for the firm.

TSMC said net profit for the three months to December increased 35 percent year-on-year to NT$505.7 billion ($16 billion), beating the NT$466.69 billion forecast by analysts surveyed by Bloomberg News.

Net revenue for the fourth quarter rose 20.5 percent from a year ago to NT$1.05 trillion, TSMC said, also beating expectations.

"Often seen as a bellwether for the broader tech cycle, TSMC's performance offers a clear read on the strength of AI-related investment," Proactive Investors had noted earlier this month.

The strong results came after Taiwan said it had reached a "general consensus" with the United States on a trade deal that the island hopes will reduce its current 20 percent tariff and shield its semiconductor industry from levies.

Taiwan has previously vowed to increase investment in the United States, purchase more US energy and boost defence spending in a bid to head off Trump's levies.

The US government launched investigations under Section 232 into semiconductors and chip-making equipment last year.

Section 232 refers to part of the US Trade Expansion Act that allows tariffs to be imposed when national security is found to be at risk.

US President Donald Trump signed an order Wednesday imposing a 25 percent tariff on semiconductors that are "transshipped through the United States to other foreign countries", enabling the government to take a cut from chips sold to China.

Taiwan is a powerhouse in the manufacturing of semiconductor chips, which are the lifeblood of the global economy, as well as other electronics.

The island has been under pressure to move more chip production to US soil. TSMC pledged last year to invest an additional US$100 billion in the United States.

But Trump's administration has made clear it wants more of the critical technology made in the United States.

TSMC announced last month that it had started mass producing its cutting-edge 2-nanometre semiconductor chips. As the company ramps up production, gross margins could face "mild" headwinds in 2026, UBS said ahead of the results.

Despite US pressure and the constant threat of invasion from China, which claims Taiwan is part of its territory, the island plans to keep making the "most advanced" chips on home ground, Taiwanese Deputy Foreign Minister Francois Chih-chung Wu told AFP recently.

B.Baumann--VB