TSMC Surges 60% Amid AI Chip Demand, Faces Trade Challenges

HSINCHU, Taiwan — Taiwan Semiconductor Manufacturing Company (TSMC) reported a significant profit increase for the first quarter of 2025, buoyed by a surge in demand for artificial intelligence (AI) chips. The company posted a net income of NT$361.56 billion, reflecting a 60.3% rise from the previous year, along with net revenue of NT$839.25 billion, which marked a 41.6% increase year-over-year.

As the world’s largest contract chip manufacturer, TSMC has capitalized on the AI boom by producing advanced processors for clients like Nvidia. However, the company also faces challenges from U.S. trade policies, including tariffs imposed by President Donald Trump and potential export controls on its clients.

The tariffs currently on Taiwan stand at 10%, but these could rise to 32% following a scheduled review, unless a trade agreement is reached between the U.S. and Taiwan. Such economic pressures have led analysts to express cautious optimism about TSMC’s future growth potential.

“Investors should closely monitor TSMC’s upcoming forecasts, especially regarding their revenue growth projections,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd. “The macroeconomic climate is shifting, and how TSMC navigates these trade tensions will be critical.”

In an attempt to diversify its supply chains and mitigate the impact of tariffs, TSMC is investing billions in additional facilities overseas. Recently, the company announced plans to allocate another $100 billion to U.S. operations, complementing a prior commitment of $65 billion for three new plants.

PSM insiders revealed that on Monday, AMD embarked on negotiations to manufacture its chips in one of TSMC’s Arizona plants, while Nvidia is set to produce significant AI infrastructure in the U.S. over the coming years, further solidifying TSMC’s role in the global tech landscape.

The performance of TSMC shares reflects current market sentiments, with Taiwan-listed stocks dipping approximately 0.4%. Year-to-date, TSMC shares have experienced a roughly 20% decline.

“While we’ve seen positive growth from TSMC, the overarching impacts of tariffs could complicate our forecasts going forward,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management.

Market reactions to TSMC’s results were tempered by concerns surrounding U.S.-China trade relations. Goldman Sachs analysts indicated that a severe financial rift between the U.S. and China could result in U.S. investors offloading approximately $800 billion in Chinese equities.

In addition, ongoing discussions between the U.S. and Japan regarding tariff negotiations could shape the overall market landscape in the coming months. Japan’s chief negotiator, Ryosei Akazawa, confirmed the lack of immediate updates from their recent talks, suggesting a wait-and-see approach regarding tariffs.

Despite TSMC’s strong performance, broader economic uncertainties could affect investment decisions across the semiconductor industry. Onlookers are keenly observing how the implications of these trade discussions might alter the operational landscape moving forward.