Strong contribution from high-performance computing
High-performance computing (HPC), the segment that encompasses accelerators for generative AI and 5G infrastructure, accounted for 55 percent of sales during the three-month period. Smartphones contributed 32 percent, while other categories, including automotive and Internet-of-Things devices, made up the remainder.
Advanced nodes of 7 nanometers or smaller generated 77 percent of total wafer revenue in the quarter. For the full year 2025, TSMC expects those nodes to represent 74 percent of revenue, up from 69 percent in 2024, highlighting the accelerating migration toward denser transistor designs that support faster processing speeds and improved power efficiency.
Investment ramps to meet next-generation demand
After initiating volume production of its 2 nm technology late last year, the company plans to scale capacity for that node throughout 2024 and beyond. To support expansion, management indicated that capital expenditure is projected at US$40.9 billion in 2025 and will rise to between US$52 billion and US$56 billion in 2026. Spending will cover additional fabrication lines, advanced packaging facilities, and research aimed at nodes below 2 nm.
Industry analysts expect artificial-intelligence servers to remain a primary growth catalyst. Counterpoint Research projects another surge in AI server demand in 2026, coinciding with the period in which TSMC’s expanded 2 nm capacity is scheduled to come online. Broader data from the Semiconductor Industry Association indicate that AI accelerators are among the fastest-growing segments in the global chip market, reinforcing the company’s investment thesis.
Mixed signals in consumer electronics
While demand for AI hardware remains robust, the outlook for chips tied to consumer devices is less certain. TSMC acknowledged an industrywide shortage of memory components, an issue that has resulted in higher costs for smartphone and personal-computer manufacturers. Executives said the effect on TSMC should be limited because the firm concentrates on advanced chips for premium handsets that are less sensitive to memory price fluctuations.
Nonetheless, the company cautioned that broader macroeconomic factors, including potential changes in global tariff policies, could influence orders in 2026. Management highlighted tariffs as a risk factor that could affect supply-chain planning and customer procurement patterns.
Global footprint expands
TSMC continued to diversify its manufacturing base beyond Taiwan. Construction is progressing on new fabrication plants in Japan, Germany, and the United States, with the most significant project located in Arizona. The firm recently acquired additional land at the Arizona site to support what it calls a “gigafab” cluster, which is expected to improve productivity and reduce logistical costs for North American customers.
Although overseas facilities are designed to mitigate geopolitical and trade-related risks, the company reiterated that operating margins for plants outside Taiwan will likely be lower, at least initially, due to higher construction and labor expenses. Management maintains that a broader geographic presence is necessary to meet local content requirements and serve major clients closer to their end markets.
Outlook
With strong demand for cutting-edge nodes, expanding capital outlays, and an increasing share of revenue tied to AI and HPC applications, TSMC expects to maintain momentum into 2025 and 2026. The company’s ability to balance margin pressure from global expansion with the opportunities created by advanced process leadership will remain a focal point for investors and industry observers.
Crédito da imagem: Bloomberg
