The TSMC Q4 results – A very bullish sign for the semiconductor industry
Let's take a close look at TSMC's Q4 results and figure out what it means for TSMC and its peers/suppliers.
The largest supplier of semiconductors globally, TSMC (Taiwan Semiconductor Manufacturing Company), released its Q4 results late last week. It impressed with stellar results and a terrific 2025 outlook, leading to shares gaining 5% and closing in on their recently set all-time high.
However, maybe even more importantly, TSMC is pretty much the semiconductor industry benchmark and the most important indicator of industry health. Its results painted a very bullish picture for the entire industry, as an industry recovery seems to be in full motion, helped by the continued proliferation of AI.
The results were reason for optimism, particularly for semiconductor equipment manufacturers, after months of pressure and multiple Wall Street cuts to WFE spending estimates, as TSMC’s bullish outlook also included a raise in Capex budget for 2025, a whopping 19% above what analysts had expected.
You see, the likes of ASML, KLA, Lam Research, and Applied Materials are wholly dependent on the outlook of the semiconductor industry. When demand for semiconductors grows, manufacturers such as TSMC, Intel, Samsung, and GlobalFoundries make higher Capex budgets available to expand their production capacity in an effort to keep up with growing demand.
This Capex is largely spent on high-end manufacturing equipment supplied by these earlier-mentioned businesses, so you can see how TSMC’s Capex raise, as the industry benchmark, is a very bullish signal for each of these.
These strong TSMC results and guidance signal that the semiconductor industry recovery is in full motion. Growth across the industry might be quite a bit better than anticipated for both TSMC and its equipment suppliers. Both will fully benefit from the next semiconductor upcycle and the growth in demand for products from the likes of Broadcom, Apple, Nvidia, and AMD.
Therefore, this TSMC earnings review is not just important to TSMC investors. Whatever part of the semiconductor industry you invest in, taking a close look at the TSMC quarterly results and management’s comments is a priority each quarter, and this time is no different.
In this article, I will dissect the TSMC results and underlying performance to see exactly how the business is doing and discuss what this means for TSMC shareholders and the semiconductor industry as a whole!
Meanwhile, with TSMC shares up 27% since I last covered these back in July, shares have gotten any cheaper, although arguably well deserved. So, are TSMC shares still a great buy?
Let’s find out!
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TSMC fully benefits from whopping AI demand
TSMC released its Q4 and FY24 results last Thursday, and as I said, they impressed Wall Street, even as expectations were already quite high in the first place. The difference maker? TSMC’s absolute dominance in advanced wafer manufacturing (sub-7nm), where the company controls over 95% of the market, makes it a massive beneficiary of the AI boom.