TSMC's AI-related revenue could grow significantly in 2025 as Nvidia (NVDA.O) could become TSMC's (TSM.N) No. 1 or No. 2 customer and contribute 20% of revenue, Citi analysts said in a research note.
In addition to Nvidia, the momentum of custom AI chips (ASICs) over the next two to three years could also support TSMC's business, they said. As most AI chips will move to 3-nanometer processes starting from the end of 2025, the average selling price increase brought about by the technology upgrade could further support TSMC's earnings growth by 2026.
Citi expects TSMC's revenue growth rate to reach 20%-25% in 2025 and gross margin to reach a high of 50%. The company added that TSMC's capital expenditure in 2025 could be between $35 billion and $38 billion. (Jinshi)