(Bloomberg) — Taiwan Semiconductor Manufacturing Corp. forecast quarterly sales and capital spending ahead of analyst estimates, raising hopes that spending on artificial intelligence devices will remain resilient in 2025.
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Major chip maker Apple Inc. And Nvidia Corp. Spending between $38 billion and $42 billion on technology and production capacity this year, or up to 19% more than analysts expected. It expected revenue of $25 billion to $25.8 billion in the March quarter, up to 6% above expectations. TSMC shares rose the most since October, and the expected spending helped fuel a rally among U.S. and European chip equipment companies including Applied Materials Inc. and ASML Holding NV.
TSMC’s strong performance has fueled optimism around an unprecedented AI spending cycle that has pushed the likes of Nvidia to new heights. The emergence of ChatGPT has spurred frenzied data center construction over the past couple of years, benefiting a host of companies providing the pipes and brains for the AI boom.
However, the lack of a significant, money-making application of AI to date has raised concerns about the possibility of a bubble. Like much of the industry, TSMC is grappling with uncertainties caused by a technology conflict between the United States and China that threatens to disrupt supply chains and halt the flow of chips around the world. The United States this month announced new export control rules on artificial intelligence chips to limit their supplies to China.
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Beyond AI, TSMC still relies heavily on consumer electronics and smartphones, with Apple still its largest customer. iPhone sales have proven to be weak, although the industry expects mobile AI features to expand over time, driving the broader market.
CEO CC Wei warned on Thursday that smartphone unit growth will remain at a low level in 2025. But he added that there will be a moderate recovery in sectors other than artificial intelligence.
TSMC’s depositary receipts in New York rose as much as 7.3%, the biggest intraday gain since October 17. Applied Materials shares rose 4% in New York and semiconductor equipment company ASML rose 2.6% in Amsterdam. In Asia, shares of Tokyo Electron Co., Ltd. also rose.
The world’s largest chipmaker reported a better-than-expected 57% increase in net income.
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