By Wen-Yee Lee, Faith Hung and Ben Blanchard
TAIPEI (Reuters) – The world’s largest contract chip maker, TSMC, gave a bullish outlook for the year on robust demand for AI applications, adding that it had yet to see any change in customer behaviour, despite uncertainty over U.S. tariffs.
The Taiwan company, a bellwether for the global chip industry, stood by its annual outlooks for sales and capital spending on Thursday and forecast artificial intelligence (AI) chip revenue to double.
Its Frankfurt-listed shares leapt 5% in morning trade.
The forecast comes despite headwinds such as tighter U.S. export controls on chips for China, including a recent decision to curb sales of a key Nvidia product, threats from U.S. President Donald Trump to levy tariffs on semiconductors as well as his planned broader reciprocal levies on imports.
“We certainly are mindful of the potential impact from all the recent tariff announcements, especially the impact on end market demand,” Chief Executive C.C. Wei told an earnings call.
“Having said that, we have not seen any change in our customers’ behaviour so far. So we are sticking to our forecasts.”
TSMC is not getting involved in tariff talks, added Wei, who unveiled an additional $100 billion investment in the United States last month, while standing beside Trump at the White House.
“This kind of tariff discussion is between countries. We are a private company,” he said.
Wei also said Taiwan Semiconductor Manufacturing Company was not in talks with other companies about joint ventures, technology licensing, transfer or “sharing”, but did not elaborate.
The comments follow media reports that the company could take a stake in a joint venture with floundering U.S. chip company Intel.
Chief Financial Officer Wendell Huang said capital expenditure for this year was expected to be between $38 billion and $42 billion, the same forecast given on the last earnings call in January.
For the second quarter, the company expects revenue of $28.4 billion to $29.2 billion, outpacing $20.8 billion for the same period a year earlier, while for the full year it expects revenue growth roughly midway between 20% and 30%.
TSMC is in the strongest position among chip companies to pass on any tariff-related price increases to customers, said Gary Tan, a portfolio manager at Allspring Global Investments.
Its net profit for January-March climbed 60% on the year to T$361.6 billion ($11.1 billion), its fourth straight quarter of double-digit growth, comfortably beating an LSEG SmartEstimate of T$354.6 billion.
In a sign that U.S. controls on chip exports to China are having their desired effect, TSMC’s revenue from China dropped to 7% of total sales from 9% a year earlier, while North America generated 77%, up from 69%.
TSMC’s planned U.S. investment, now at $165 billion, is key to the U.S. chip industry and bringing more production there would remove a major supply chain risk for customers, among them Qualcomm and Advanced Micro Devices.
Wei said he expected about 30% of the company’s capacity for its latest 2-nanometer and more advanced chips will be located in Arizona after the U.S. plants are completed.
TSMC’s shares have fallen this year, as have many chip stocks. Its Taipei-listed shares are down about 20%, for their worst start to a year in at least three decades as foreign investors flee.
Foreign investors have sold $8.66 billion worth of TSMC shares this year after buying $2 billion last year and $10.4 billion in 2023, Goldman Sachs said in a report.
Other factors to sap sentiment included investor jitters about spending on AI infrastructure and competitive threats such as Chinese startup DeepSeek’s launch of cheaper AI models.
Though TSMC’s earnings report came after the market close in Taipei, the upbeat results helped lift shares of Japanese tech firms and some European companies.
On Wednesday, ASML, the world’s biggest supplier of computer chip-making equipment, said tariffs were increasing uncertainty around its 2025 and 2026 outlook, but stood by its annual guidance.
($1=32.4770 Taiwan dollars)
(Reporting by Wen-Yee Lee, Faith Hung and Ben Blanchard; Additional reporting by Ankur Banerjee in Singapore; Writing by Anne Marie Roantree; Editing by Edwina Gibbs and Clarence Fernandez)
