TSMC Forecasts Record Profits as AI Chip Demand Soars and Tariff Uncertainty Grows

Taiwan Semiconductor Manufacturing Company, known as TSMC, stands at the center of a perfect storm: soaring requests for AI chips that exceed its capacity, rising trade strains that threaten its model, and geopolitical uncertainties that lay bare the delicate nature of global semiconductor delivery networks. As the world’s largest contract foundry, TSMC produces more than half of the planet’s advanced logic chips, giving it a leading role in technology supply chains. That dominant position now brings extra scrutiny from governments and industry players alike.

At the firm’s annual shareholders meeting in Hsinchu on Tuesday, CEO C.C. Wei projected record numbers ahead. “Our revenue and profit this year will set new historical highs,” Wei declared, projecting a landmark performance in spite of the challenges facing the business.

This optimistic forecast comes as TSMC contends with the indirect effects of US duties on imports and the pressure of meeting record-setting demand from AI developers.

Wei addressed mounting worries over President Donald Trump’s trade measures and their influence on the semiconductor sector. “Tariffs are imposed on importers, not exporters. TSMC is an exporter,” he told shareholders. “But tariffs can lead to slightly higher prices, and when prices go up, demand may go down.”

He assured the audience that should levies push prices upward and curb overall chip usage, TSMC’s fundamentals remain sound. “Our business will still be very good,” Wei added, “I am not afraid of anything, I am only afraid that the world economy will decline.”

Washington’s broad tariff program has injected uncertainty into the chip sector. The administration initially levied a 32 percent duty on certain Taiwanese goods as part of wider trade actions, though that rate was paused for ninety days and semiconductors were carved out from those levies. The levies first took effect in early May, sending shockwaves through manufacturing hubs in Asia and North America. Still, the temporary waivers created some breathing room for chip vendors, but companies remain on edge as those exemptions could expire if trade talks falter.

TSMC’s core operations have continued to thrive on exploding interest in AI applications. Wei pointed out that demand for specialized AI chips remains “very strong” and consistently exceeds what the foundry can deliver.

“Our job is to provide our customers with enough chips, and we’re working hard on that. ‘Working hard’ means it’s still not enough,” he remarked at the meeting. Key clients like Apple and Nvidia have driven much of this surge in AI-related wafer orders.

Sales data from April highlight the robust pace. Revenue for the month reached NT$349.6 billion (about US$11.6 billion), marking a 48.1 percent increase compared to the prior year and up 22.2 percent from March figures. Strong demand for 7-nanometer and 5-nanometer chip processes carried much of the load and pushed capacity utilization at TSMC’s multiple fabs to record levels.

Wei noted that part of this rise reflected customer stockpiling ahead of expected trade moves, yet he stressed that the underlying demand for AI chips stays exceptionally high.

The gap between AI chip orders and available output is emerging as TSMC’s central challenge. The company is pushing to expand its production capacity to meet client needs though the sheer scale of orders continues to push even the world’s most advanced fabs to their limits.

This bottleneck mirrors industry-wide trends in which AI systems—from data center goods to smart devices—demand cutting-edge semiconductors that only a handful of foundries can manufacture at high volume.

Amid this pressure, TSMC has faced calls to spread its manufacturing footprint beyond Taiwan. Continuous territorial claims by Beijing and threats of force have fueled worries over the resilience of critical chip production chains.

Rumors about a potential TSMC project in the Middle East surfaced recently. Wei dismissed these claims, stating, “I think rumours are really flying everywhere,” and refuted reports suggesting plans for new factories in the United Arab Emirates.

TSMC is actively developing sites in the United States, Europe, and Japan. Those investments aim to shield clients from geopolitical risks and address requests for supply chains that reach multiple regions. In the US, work is underway on a facility in Arizona that will target high-performance computing chips for leading tech firms. Plans in Europe focus on strategic participation in Germany and the Netherlands, while in Japan, TSMC has secured key partnerships with local electronics groups.

Navigating a web of regulations across different governments forms another part of TSMC’s strategy. Wei confirmed that the company collaborates closely with authorities in Taiwan and the United States to follow all laws and regulatory provisions.

In a notable compliance move, TSMC paused deliveries to China-based chip designer Sophgo after finding that its product matched components inside AI processors from Huawei Technologies, a Chinese firm under extensive US restrictions.

That case underscores TSMC’s tightrope walk between commercial partnerships and adherence to international trade controls.

Wei also pointed to broader market risks that could reshape demand patterns in the semiconductor world. His remarks about fearing a global slowdown more than specific tariffs highlight how overall economic health drives long-term prospects.

Forecasts suggesting record revenue and profit levels imply that the current wave of AI-driven orders may offset potential obstacles from trade barriers or wider economic weakness. The ongoing success of these projections will rest on further advances in AI technology and steady growth in international markets.