TSMC raises revenue forecast on bullish outlook for AI megatrend

TAIPEI (Reuters) - TSMC, the world's biggest producer of advanced chips, raised its full-year revenue forecast on Thursday on a bullish outlook for spending on artificial intelligence, after posting a record profit that blew past market estimates.

The strong results underscore the continued faith in AI, brushing off at least for now concerns about a bubble.

TSMC said it expects robust artificial intelligence demand to continue, as it raised its 2025 revenue guidance to mid-30% growth in U.S. dollar terms from around 30%, and maintained its forecast for capital spending at up to $42 billion for 2025.

"AI demand actually continues to be very strong - more strong than we thought three months ago," CEO C.C. Wei told an earnings call.

"We are also happy to see a continuous strong outlook from our customers," he added.

"In addition, we directly receive very strong signals from our customers requesting the capacity to support their business. Thus, our conviction in the AI megatrend is strengthening."

There has been a flurry of mega deals between AI firms and chipmakers, notably by OpenAI with Nvidia, AMD and Broadcom, in the past month or so to build $1 trillion or more in data center capacity.

That portends more demand for chips, which make up a significant portion of the cost of the data centers.

Nvidia, AMD and Broadcom all rely on TSMC for chip production.

The multi-billion dollar investment announcements have raised concerns about the formation of a bubble reminiscent of the dotcom boom and bust, with securities investors on guard for signals that demand is tailing off or that the massive spending is not paying off as anticipated.

Recent company announcements indicate demand is resilient.

The head of Australia's Macquarie Asset Management (MAM), which sold its Aligned Data Centers business in a deal worth $40 billion, said on Thursday the sale was not a sign the global data center boom had peaked, while ABB's big increase in orders in the United States during the third quarter was due to demand from areas like data centers being built for AI.

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Taiwan Semiconductor Manufacturing Co, whose customers also include iPhone maker Apple, posted a 39.1% jump in third-quarter net profit and said it would be prudent in its business planning going into 2026.

Benefiting from surging demand for advanced chips used in AI applications, TSMC said net profit for July-September climbed to T$452.3 billion ($14.76 billion).

That was well ahead of a T$417.7 billion LSEG SmartEstimate drawn from 20 analysts. SmartEstimates are weighted toward forecasts from analysts who are more consistently accurate.

"We are still very comfortable that the demand on leading-edge semiconductors is real. And as I continue to say that we look at all the demand and look at our capacity expansion, TSMC needs to work very hard to narrow the gap," Wei said, referring to supply and demand.

U.S. President Donald Trump's trade policies and threats to put tariffs on semiconductors have created uncertainty for the global chip industry and TSMC.

Still, Wei said even if the China market was "not available" to the company because of U.S. restrictions, then "I still think the AI's growth will be very dramatic".

TSMC announced plans for a $100 billion U.S. investment with Trump at the White House in March, on top of $65 billion pledged for three plants in the state of Arizona, one of which is up and running.