By Sherry Qin

Taiwan Semiconductor Manufacturing Co. remains confident that it can post solid sales growth this year, even as new U.S. tariffs crystallize fears about the outlook for the global chip industry.

TSMC on Thursday backed its guidance for 2025 after posting a strong earnings beat for the first three months of the year, before the Trump administration announced a slate of tariffs including a 32% duty on Taiwan.

While acknowledging trade risks, TSMC Chairman and Chief Executive C.C. Wei said the company hasn't seen any changes in customers' behavior since the sweeping U.S. tariffs.

The company, which makes chips for Apple and Nvidia, continued to guide for mid-20% growth in sales this year and expects revenue from artificial intelligence-related servers and processors to double in 2025.

For the current quarter, the company said it expects revenue of between US$28.4 billion and US$29.2 billion.

The Taiwanese company, which has been cashing in on demand for artificial-intelligence technology, is caught in the crosshairs of President Trump's trade ambitions.

TSMC's first-quarter profit jumped 60% to 361.56 billion New Taiwan dollars, equivalent to US$11.16 billion, as its revenue rose 42% from a year earlier.

The U.S. president has been outspoken about Taiwan's chip-industry dominance and has imposed--and threatened to impose--tariffs both reciprocal and sectoral that put TSMC's business at risk.

Taiwan now faces a 10% blanket tariff, which could rise to 32% after the 90-day pause if the island economy fails to secure a trade deal with the U.S.

The Trump administration last week made tariff exemptions for some tech products, including chips, but said they could soon face separate levies, creating more uncertainty for the company and its key customers.

Speaking at an event last week, Trump said he told TSMC it could face up to a 100% tax if it doesn't shift more production to the U.S. TSMC in March announced plans to invest at least US$100 billion more to expand its footprint in the U.S., including three new chip-manufacturing plants.

However, analysts don't think TSMC would be exempt from tariffs despite the investment commitment.

"It'd be safe to assume that some tariff will be eventually slapped on semiconductors and consumer electronics, even if the exact figure is anyone's guess," Morningstar analyst Phelix Lee said.

Jefferies analysts expect any semiconductor tariffs to be phased in after a one-year exemption, with duty rates likely to escalate over three years.

The earnings beat and stable guidance from the world's largest contract chipmaker come against a darkening outlook for the semiconductor sector. Industry bellwether ASML on Wednesday reported weaker-than-expected orders for its chip-making machines and warned that Trump's tariff policies are casting uncertainty over the industry. AI chip giant Nvidia this week warned of a $5.5 billion charge related to new China export curbs, sending shivers through sector stocks.

Responding to a question about the U.S. government's new licensing requirement for Nvidia's H20 chip exports to China, the company's management noted that they considered the potential impact of the restrictions when providing the full-year outlook.

"Other than China, the demand is still really strong," Chief Financial Officer Wendell Huang said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

April 17, 2025 04:12 ET (08:12 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.