Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is expected to report a 58% increase in its fourth-quarter profit, reaching USD 11.41 billion for the quarter ending December 31. This surge is largely attributed to the growing demand for chips used in artificial intelligence (AI) applications. The company's customers include major players like Apple and Nvidia, and the overall megatrend towards AI has significantly benefited TSMC.

Despite the strong performance, TSMC faces challenges such as the ongoing U.S. government technology restrictions on China and the uncertainty surrounding President-elect Donald Trump's administration, which has threatened to impose broad import tariffs. Nonetheless, analysts are optimistic about TSMC's growth prospects, particularly in 2025, with AI-driven demand expected to remain a key growth driver.

TSMC recently reported a revenue increase in Taiwan dollars for the fourth quarter, surpassing market expectations. The company's quarterly earnings call, scheduled for Thursday, will provide more insights into its revenue outlook in U.S. dollars.

In addition to its strong performance, TSMC is making substantial investments in overseas manufacturing, including USD 65 billion in three plants in Arizona, USA. Despite this expansion, the company has stated that most of its manufacturing will continue to be based in Taiwan. The success of its Arizona fab, particularly in terms of yield rates—the percentage of usable chips—will be crucial for TSMC's continued growth.