TSMC’s AI Business is Booming, But How Long Can It Last?

Taiwan Semiconductor Manufacturing Co. (TSMC) continues to ride the AI wave, reporting a 34% year-over-year sales jump in November to NT$276.1 billion ($8.5 billion). That’s a solid number, but it comes with a twist. Revenue fell 12.2% from October. Still, the company’s year-to-date growth sits at an impressive 31.8%, keeping it well ahead of most peers.

TSMC’s sales surge reflects its critical role as the chipmaker of choice for tech giants like Nvidia and Apple. With the explosion of artificial intelligence, particularly since ChatGPT’s debut in late 2022, the company has been cashing in on the demand for AI hardware, from GPUs to data center servers. AI-driven spending has been a lifeline for TSMC, pushing its stock up 80% this year and giving it pricing leverage as rivals Intel and Samsung struggle to compete.

But not everyone’s convinced the AI party will last forever. Concerns are brewing over the sustainability of data center construction and whether this spending spree will deliver returns. With no “killer app” driving AI adoption beyond enterprise hype, investors are starting to ask whether the growth story is topping out.

Now, add another layer of intrigue: China’s antitrust investigation into Nvidia. As TSMC’s biggest AI client, any restrictions or slowdowns imposed on Nvidia could ripple through the supply chain, potentially hitting TSMC’s own sales. While Nvidia’s dominant position in the GPU market makes it hard to dethrone, regulatory scrutiny in one of its largest markets could cool demand for AI chips and, by extension, TSMC’s momentum. And the tensions between Beijing and Taipei don’t make the picture any less murky.

Still, TSMC remains optimistic, projecting robust demand well into 2025. For now, Nvidia, Microsoft, and Amazon are still writing the checks, and TSMC’s cashing them as fast as it can.