TSMC sees 57% profit jump in Q1 as AI demand grows

Taiwan Semiconductor Manufacturing Co (TSMC) is expected to report a 57% increase in first-quarter net profit, reaching T$354.6 billion (US$10.92 billion), up from T$225.5 billion last year (US$6.93 billion).

This growth is driven by rising demand for chips used in AI.

However, TSMC faces challenges from US trade policies, with President Donald Trump warning the company about a potential 100% tax if it doesn’t expand its US operations.

Despite the AI sector boost, TSMC’s stock has dropped by 20% this year. Its capital spending for 2025 is expected to rise by up to 41%, reaching US$38 billion to US$42 billion.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Taiwan’s semiconductor industry demonstrates resilience to trade tensions

Taiwan’s tech sector has historically benefited from trade conflicts rather than suffering from them, showing remarkable adaptability.

During the previous U.S.-China trade war, Taiwan gained $4.2 billion from trade diversion effects, with tech hardware accounting for $2.8 billion of those gains1.

TSMC’s projected 57% profit leap in Q1 2024 demonstrates the company’s continued ability to navigate geopolitical tensions despite market concerns.

The robust performance occurs despite significant uncertainty, with TSMC’s shares dropping 20% this year largely due to concerns about potential U.S. tariff policies.

These results suggest that while trade tensions create volatility, Taiwan’s specialized position in the global semiconductor supply chain provides substantial insulation from the worst economic impacts.

2️⃣ Semiconductor manufacturing reshoring predates current political pressures

TSMC’s massive U.S. expansion follows a longer-term trend of Taiwanese firms relocating operations that began before recent trade disputes.

Taiwanese technology companies were already shifting production back from China prior to trade wars, indicating TSMC’s $165 billion total U.S. investment commitment represents an acceleration of existing strategic plans rather than merely a response to current political demands1.

The Taiwanese government had previously implemented supportive policies for this reshoring trend, including preferential financing and relaxed labor regulations for returning manufacturers1.