By Adam Clark

Taiwan Semiconductor Manufacturing is set to report a surge in quarterly profit on the back of demand for artificial-intelligence hardware. However, proposed U.S. restrictions on exports of chips could cast a shadow over its December quarter results.

The Taiwanese chip manufacturer reports quarterly results Thursday morning. It is expected to post a 55% rise in net profit to 370.64 billion New Taiwan dollars ($11.24 billion) for the quarter, according to the consensus estimate of 26 analysts in a FactSet poll.

TMSC's December-quarter revenue came to 868.5 billion New Taiwan dollars or $26.35 billion, based on its monthly figures. That was ahead of the 854 billion New Taiwan dollars forecast by a FactSet poll of analysts. The company previously said it expected quarterly revenue of $26.1 billion to $26.9 billion.

While TSMC makes a variety of chips, the growth is likely to reflect strong demand for hardware to power AI systems. TSMC dominates the market for manufacturing high-end chips. It is the main supplier for chips for Nvidia, which leads the market for semiconductors used for AI applications.

The company also makes the core processors inside Apple iPhones, Qualcomm mobile chipsets, and processors made by Advanced Micro Devices.

TSMC could issue financial guidance for 20% to 25% sales growth for 2025 in U.S. dollar terms, driven by continued global investment in AI infrastructure, Deutsche Bank analyst Robert Sanders wrote in a recent research note.

Apart from financial figures, analysts will be eagerly watching for any commentary from TSMC over the Biden administration's proposal to impose AI chip restrictions that would apply caps on U.S. exports to more than 120 countries. Taiwan was excluded from the proposed limits, but some of TSMC's customers could be affected.

Write to Adam Clark at adam.clark@barrons.com

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January 15, 2025 16:30 ET (21:30 GMT)

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