Taiwan Semiconductor Manufacturing Co. (TSMC) reported a slowdown in its sales growth for January, reflecting challenges in the semiconductor sector as questions surrounding artificial intelligence (AI) investments continue to grow. Revenue for the month surged by 36% year-on-year, reaching NT$293.3 billion ($8.9 billion), a slight deceleration from the 38.8% growth seen in the previous quarter. Analysts had anticipated a 41% increase in sales for the current quarter ending in March, driven by TSMC’s major partnerships with companies like Nvidia and Apple Inc.
However, the early-year sales data is somewhat complicated by the timing of the Lunar New Year holiday, which falls on either January or February and can distort comparisons across years.
Despite the uncertainties surrounding AI spending, large tech firms, including Microsoft, Alphabet, and Meta Platforms, remain undeterred. They have all pledged significant investments, with Amazon.com alone committing to $100 billion for AI development. These investments follow the rapid rise of AI models from Chinese startup DeepSeek, which has disrupted the market with lower-cost alternatives.
Earlier this year, TSMC forecasted that its capital expenditures could reach a record $42 billion in 2025, driven by rising AI demand. This outlook was bolstered by ASML Holding NV, a key supplier of equipment to TSMC, despite the market disruptions caused by DeepSeek’s emergence.
Amid these developments, TSMC’s future remains clouded by geopolitical risks, particularly the potential for new US tariffs on semiconductor imports, a matter that continues to loom large over the industry. The company is set to hold a board meeting in Arizona this week, home to its most advanced US-based facility, as it navigates both market volatility and political uncertainty. Taiwan’s Minister of Economic Affairs, J.W. Kuo, confirmed the meeting would take place amid these mounting challenges.
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