With the rapid development of artificial intelligence technology, TSMC, the world's largest chip foundry, is at the forefront of this technological revolution. According to TSMC's latest financial report and market analysis, the demand for AI chips is growing rapidly and is expected to contribute more than 20% of TSMC's revenue in 2028.
TSMC's earnings report for 2023 showed that despite market volatility, the company's full-year revenue was approximately NT$216.174 billion (US$69.298 billion), with a net profit margin of 38.8 percent. Of particular note is the significant contribution of advanced process technology to TSMC's performance, with the 3nm process accounting for 15% of total wafer revenue in the fourth quarter, and 5nm and 7nm accounting for 35% and 17% respectively.
TSMC CEO Chieh-Chia Wei pointed out during the earnings call that demand for AI server processors is strong and will continue to grow rapidly.AI server processors are defined as GPUs, CPUs and AI gas pedals that perform AI training and reasoning. TSMC expects to double its revenue in AI server processors this year, accounting for about 10% of overall revenue, and to achieve a CAGR of 50% over the next five years.
Figure 1: Strong demand for AI chips expected to contribute over 20% of revenue in 2028
TSMC's leadership in advanced manufacturing processes and packaging technologies has enabled it to occupy a key role in the AI chip market, and Counterpoint Research expects TSMC to continue to expand its share of the AI chip market, especially with its rapid ramp up in 3nm processes and AI applications, making it a major beneficiary of AI semiconductors.
TSMC expects revenue growth of more than 20% in 2024 and has a projected CAGR of 50% for AI-related revenue. TSMC also plans to double its CoWoS capacity by 2024 to meet the demand for multi-chip assemblies and enhance its SoIC portfolio for high-performance applications.
The global AI market is currently highly competitive, with major companies such as Amazon, Microsoft, Google, and Meta actively promoting related projects, making NVIDIA and AMD's related chips in short supply, while the two companies rely on TSMC for the production of their main products, making TSMC's advanced process and packaging production capacity particularly needed. TSMC is also actively expanding its advanced packaging capacity. According to industry estimates, TSMC's CoWoS packaging monthly output can reach between 45,000 and 50,000 chips by the end of this year, which is about two times more than the 15,000 chips in 2023, and the capacity of 50,000 chips per month can be stabilized by the end of 2025. As for SoIC, it is expected to reach a monthly production capacity of 5,000-6,000 wafers by the end of this year, which is also a multiple of the monthly production in 2023, and can be further increased to 10,000 wafers per month by the end of 2025.
TSMC's strong performance and aggressive market forecasts underscore its leadership position in the global chip market and the important role of AI technology in driving the company's growth. With the continuous advancement of AI technology and the expansion of application areas, TSMC is expected to realize significant revenue growth in the coming years and further consolidate its leading position in the global semiconductor industry.
