(Bloomberg) — Taiwan Semiconductor Manufacturing Co. forecast quarterly sales and capital spending above analyst estimates, fueling hopes that spending on AI hardware is expected to remain resilient in 2025.
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The main chipmaker of Apple Inc. and Nvidia Corp. plans to spend between $38 billion and $42 billion on technology and capacity this year, up to 19% more than analysts expected. It forecast revenue of between $25 billion and $25.8 billion for the March quarter, up to 6% above forecasts. TSMC shares saw the biggest rise since October, and the projected spending helped fuel a rally among U.S. and European chip equipment companies, including Applied Materials Inc. and ASML Holding NV.
TSMC’s strong performance has boosted optimism over an unprecedented AI spending cycle that has propelled companies like Nvidia to new heights. The advent of ChatGPT has sparked frenzied data center construction over the past two years, benefiting a host of companies that provide the pipes and brains of the AI boom.
Yet until now, the lack of a big-profit-generating AI application has fueled concerns about a potential bubble. And like much of the industry, TSMC is grappling with uncertainties stemming from a technology conflict between the United States and China that threatens to disrupt supply chains and stem the flow of chips around the world. The United States this month announced new export control rules for AI chips to reduce their supply to China.
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Away from AI, TSMC remains heavily dependent on consumer electronics and smartphones, given that Apple remains its largest customer. iPhone sales have proven to be subdued, although the industry expects mobile AI capabilities to expand over time, boosting the market as a whole.
On Thursday, CEO CC Wei warned that smartphone unit growth would remain below 10% in 2025. But he added that there would be a slight recovery in non-AI segments.
TSMC foreign depository receipts in New York rose 7.3%, the largest intraday gain since October 17. Shares of Applied Materials rose 4% in New York and semiconductor equipment supplier ASML rose 2.6% in Amsterdam. In Asia, Tokyo Electron Ltd. has also progressed.
The world’s largest chipmaker reported a better-than-expected 57% increase in net profit.