TSMC Chairman: "AI Demand Is Not a Bubble... Revenue Forecast Raised"

Record-High Capital Expenditure Raises Concerns
"Strong AI Demand Exists"
AI Accelerator Revenue Forecast Upgraded

The chairman of TSMC, the world's largest foundry (semiconductor contract manufacturing) company, stated that demand for artificial intelligence (AI) is not a bubble.

According to Taiwanese media such as United Daily News and China Times on January 16, TSMC Chairman Mark Liu made this assertion during the previous day's fourth-quarter earnings briefing, addressing concerns in some quarters over the company’s record-high capital expenditure (facility investment).

Chairman Liu projected this year’s capital expenditure to be between 52 billion and 56 billion dollars, which is 27 to 37 percent higher than last year’s 40.9 billion dollars (approximately 60.3 trillion won), in order to respond to robust demand for AI, 5G, and high-performance computing (HPC).

He explained, “Over the past three to four months, we have held intensive discussions with global cloud service providers (CSPs) and major clients,” adding, “AI demand is real.” He went on to say, “AI is not just a trend,” and emphasized, “We have already confirmed that it is becoming integrated into daily life and has begun to enhance productivity.”

Chairman Liu also pointed out that clients possess far more cash than TSMC, indicating that strong AI demand is backed by substantial financial resources. On this basis, he announced that TSMC is raising its AI accelerator revenue growth forecast for 2024 to 2029 from the previous 45 percent to 54 to 59 percent.

Chairman Liu also dismissed concerns about a potential decline in TSMC’s market share due to competition with American semiconductor company Intel. He stated that even if Intel has a technological roadmap, it would require two to three years for advanced technology development and an additional one to two years for mass production, making it difficult to replace TSMC’s technology in the short term. “This is not an issue that can be solved simply by pouring in massive amounts of capital,” he said.

Sources revealed that, in addition to the 1,100-acre (about 4.452 square kilometers) site TSMC has secured for a factory in Phoenix, Arizona, the company recently purchased an additional 900 acres (about 3.642 square kilometers) of land for 200 million dollars (about 294.7 billion won).

Furthermore, TSMC plans to establish a large-scale semiconductor cluster on these sites, which will include more than six semiconductor fabs (semiconductor production plants), two advanced packaging plants, and a research and development (R&D) center.

TSMC’s revenue last year was 3.809 trillion New Taiwan dollars (about 177.5 trillion won), a 31.6 percent increase from the previous year. Net profit was 1.7178 trillion New Taiwan dollars (80 trillion won). Both TSMC’s revenue and profit last year reached all-time highs.