TSMC Defies Tariff Headwinds with Surging AI Chip Demand

HSINCHU, Taiwan, June 3, 2025 - Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, remains bullish on its growth prospects as demand for AI chips continues to outstrip supply, despite uncertainties posed by U.S. tariffs. Speaking at the company’s annual shareholders meeting, CEO C.C. Wei acknowledged the indirect impact of tariffs but emphasized that robust AI demand is driving TSMC’s record performance.

With AI accelerators projected to double in revenue contribution in 2025, TSMC is poised to maintain its dominance in the global semiconductor market, even as trade policies create challenges for the industry.

AI Revenue Powers TSMC’s Growth

TSMC’s high-performance computing (HPC) division, which includes AI accelerators like GPUs and ASICs, accounted for 51% of its 2024 revenue, growing 58% year-on-year. In Q1 2025, the company reported a 60% profit increase to $11.1 billion, driven by AI chip demand from clients like Nvidia and Apple.

Recent data indicates TSMC’s AI-related revenue, comprising 15-17% of total sales in 2024, is expected to double in 2025, with a projected 45% compound annual growth rate through 2029. This growth is fueled by AI applications expanding into smartphones, PCs, and IoT devices, positioning TSMC as a cornerstone of the AI-empowered world envisioned by Wei.

ALSO READ | Snowflake Acquires Crunchy Data to Supercharge AI Database Capabilities

U.S. Tariffs and Industry Challenges

The Trump administration’s 2025 trade policies, including a 25% blanket tariff on semiconductors and proposed duties up to 100% on Taiwanese chips, have introduced uncertainty. While semiconductors were initially exempt, recent White House statements suggest targeted chip tariffs are under consideration, potentially increasing U.S. chip prices by up to 59%.

TSMC, which supplies 44.2% of U.S. logic chips, faces indirect tariff impacts through its supply chain partners. Despite this, Wei noted no significant changes in customer behavior, with TSMC’s $165 billion U.S. investment, including five new Arizona fabrication plants, reinforcing its commitment to the American market.

Did You Know?
TSMC produces over 90% of the world’s most advanced semiconductors, powering everything from iPhones to Nvidia’s AI GPUs, making it indispensable to the global tech ecosystem.

Strategic Outlook Amid Global Shifts

TSMC’s optimism is underpinned by its technological leadership and strategic investments. Wei forecasts 24-26% sales growth for 2025, outpacing the semiconductor industry’s 10% projection. Advanced technologies (7nm and below) are expected to drive 80% of wafer revenue, supported by TSMC’s $100 billion Arizona expansion to produce 3nm and 2nm chips.

Despite U.S. export restrictions to China reducing TSMC’s China revenue to 7% from 9%, North America’s share rose to 77%. However, challenges like a potential $1 billion fine from a U.S. export control probe involving Huawei underscore the delicate balance TSMC navigates in global trade.