The Taiwan Semiconductor Manufacturing Company's (TSMC) partnership with NVIDIA enabled the firm to earn more than $10 billion in AI-related revenue in the second quarter, according to Taiwanese analysts. The trend is expected to continue in 2025 and it shows the growing importance of NVIDIA in TSMC's list of customers, which has been dominated by Apple so far. While TSMC primarily produces AI GPUs for NVIDIA, the firm also makes other AI chips such as application-specific integrated circuits. (ASICs) and memory controllers that work with high bandwidth memory.
TSMC Expected To Grow Revenue By 30% In 2025 Due To AI, Say Analysts
TSMC reported its second quarter earnings report last week and the results saw the firm grow its revenue by 61% primarily due to AI chip demand. The firm also forecast a midpoint revenue of $32.4 billion for the current quarter to hint towards a 38% annual revenue growth.
Management revealed during the earnings call that advanced process technology families, used primarily in AI and top-tier consumer gadgets, accounted for 74% of TSMC's revenue during the second quarter.
Out of the $31.7 billion in TSMC's second quarter revenue, one third, or roughly $10 billion, was accounted for by AI chips, according to Taiwanese analysts. TSMC's official figures show that 60% of the revenue came from high performance computing (HPC) applications while smartphones accounted for another 27%.
During the earnings call, CEO Dr. C.C. Wei attributed the firm's 30% annual revenue growth guidance to AI-led HPC demand primarily due to the firm's 3-nanometer and 5-nanometer chip technologies.
Not only did AI account for roughly 30% of TSMC's second quarter revenue, but the analysts also believe that for the full year, the firm could earn NT$868 billion through AI sales or $29.51 billion (1NT$ = $0.034). Should this occur, then TSMC's 2025 AI sales, led primarily by NVIDIA, will double over last year's NT$434 billion.
The analysts add that in the future, AI could account for as much as half of TSMC's annual revenue. TSMC benefits from its close relationship to NVIDIA as it is the only contract manufacturer in the world capable of shipping leading-edge chips in volume. NVIDIA's latest GPUs rely on TSMC's 4-nanometer process, which is two generations behind the firm's latest technologies.
Ahead of the 4-nanometer tech is the 3-nanometer technology currently used by Apple, while TSMC aims to kick off the mass production of its 2-nanometer technology this year.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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