TSMC has raised its revenue forecast. What does this mean for the bigtechs - from Meta to Google?

Taiwan's TSMC, the world's largest contract chip maker, has improved its revenue forecast for 2025. This has increased the optimism of investors who are betting on the continuation of the global boom in spending on artificial intelligence.

TSMC said on July 17 that it expects sales to grow by about 30% in dollar terms this year - instead of its previous forecast of around 25%. The new benchmark bolstered market confidence that tech giants - from Meta to Google - will continue to invest in building data centers for artificial intelligence, wrote Bloomberg.

TSMC's updated forecast suggests robust demand for top AI chips from Nvidia and AMD is outpacing the manufacturers' capabilities, Bloomberg notes. The Taiwanese manufacturer raised the forecast not because of news that the U.S. has allowed Nvidia to resume shipments of its powerful H20 chip to China, TSMC chief Xi Xi Wei clarified. He said the resumption of sales is a good signal for the industry, but it's too early to say what the effect will be.

Against this backdrop, futures on the U.S. Nasdaq technology index turned upward, while quotes of the leading supplier of chip printing equipment ASML, which collapsed a day earlier, jumped by 2% in Amsterdam trading. TSMC's own American depositary receipts soared 4% on the New York premarket.

"TSMC has lifted sentiment in the semiconductor sector just in time - early in the second half of 2025, amid growing concerns over industry duties and political risks," said Gary Tan of Allspring Global Investments.

Despite raising its revenue growth forecast, TSMC still expects sales in 2025 below consensus estimates of $117 billion versus $125 billion, noted Bloomberg analysts Charles Shum and Stephen Tseng. They estimate that TSMC's fourth-quarter sales could be down 10 percent from the third quarter, and the strengthening Taiwan dollar will continue to put additional pressure on margins.

TSMC remains a major chip maker for Apple, but has significantly reduced its reliance on the smartphone market in recent years. Sales in the high-performance computing segment - including chips for servers and data centers - now generate 60% of the Taiwanese company's total revenue.

This article was AI-translated and verified by a human editor