TSMC Shares Soar on Strong Q4 Results and Promising Q1 Forecast
TSMC, the world’s leading chip manufacturer, has posted impressive fourth-quarter results that exceeded analysts’ expectations. The Taiwanese company recorded earnings per share of NT$19.50 ($0.63), surpassing the anticipated NT$18.12 ($0.57). TSMC’s gross margin for Q4 stood at 62.3%, higher than the projected 60.6%, while its operating margin was 54%, exceeding the estimate of 50.9%.
Strong Q4 Performance
In December, TSMC announced total sales of NT$1.046 trillion (approximately $33.7 billion), which beat Wall Street’s forecast of NT$1.02 trillion. This strong performance has led to a rally in TSMC’s stock prices during premarket trading.
Promising Q1 Outlook
Looking ahead, TSMC forecasts revenues for Q1 to range between $34.6 billion and $35.8 billion. This projection is significantly higher than the consensus estimate of $33.2 billion. Additionally, the company expects gross margins to be between 63% to 65%, outpacing the analyst expectation of 59.6%. Its operating margin guidance remains strong at 54% to 56%.
Impact on the Semiconductor Industry
The positive results have also stimulated gains for ASML, a Dutch company that produces lithography machines essential for chip manufacturing. The demand for TSMC’s services is further amplified by the ongoing AI boom, highlighting its crucial role in the industry.
Capital Investment Plans
During the earnings call, TSMC’s management revealed plans for a capital budget ranging from $52 billion to $56 billion for the current year. Of this budget, 70% to 80% will be dedicated to advanced process technologies.
Trade Deal with the US
In addition to its financial results, reports indicate that Taiwan is expected to finalize a trade agreement with the United States. TSMC is anticipated to play a significant role in this deal, which aims to reduce tariffs and secure favorable treatment for semiconductor exports, especially as TSMC expands its manufacturing presence in the US.
- Earnings per Share (Q4): NT$19.50 ($0.63)
- Gross Margin (Q4): 62.3%
- Operating Margin (Q4): 54%
- Total Sales (December): NT$1.046 trillion ($33.7 billion)
- Q1 Revenue Forecast: $34.6 billion – $35.8 billion
- Gross Margin Forecast (Q1): 63% – 65%
- Operating Margin Forecast (Q1): 54% – 56%
- Capital Budget (Current Year): $52 billion – $56 billion
Despite experiencing a decline in stock value over 12 of the past 13 sessions after quarterly results, TSMC’s recent performance and strong forecasts are reversing this trend, showing resilience in a dynamic market.
