TSMC is our top story. Taiwan Semiconductor Manufacturing. These are the ads. The US-listed shares. They are big. In fact, the shares are trading at their highest level since 1997 when they first started trading in the United States. The outlook for revenue growth for 2024 is boosted about 30% in dollar terms. And the big picture is that we kind of feel better about the outlook for the chip industry in general. Why TSMC is the contract manufacturer to the world. They make the most important chips that we care about, namely those high-performance GPUs in the context and post-ASML. We had a lot of anxiety around hardware and chip making, but doesn't seem like it's there right now because Bloomberg's Peter Strong can join us from London for more. And Peter, just give us that context of what TSMC manages to prove to the market. That really echoing in video, the demand is insatiable. That's right.

Caroline, as you alluded to, all eyes were on TSMC after this ASML report. The Dutch equipment company came out and said that bookings in the chip industry were only about half of what analysts had been expecting. And that really startled the industry. Nvidia's stock was down, and everybody was wondering who was the weak player in the industry, which company is which chip company is struggling. And now we know it's not TSMC. TSMC has done very, very well here. They boosted their guidance, they beat earnings estimates, and they reassured the market really that demand for AI in particular is very, very strong at this point. C.C. Wei, the CEO, got a lot of questions in the call after results about that, and he said that the demand is real. He called it in saying at one point he said it's very, very strong at this point. So that's there's a reassurance play.

that's going on here, too. Peter, TSMC boosted its capital expenditures outlook for 2025. Why is that important? Well, it's partly important because ASML is the company that sells the chip-making machines to all these companies. TSMC is the most advanced producer of these chips. And so there is a question about who's going to buy these machines from ASML and then others in the industry. We know that a couple of the key players are struggling right now. Intel and Samsung are both having quite a bit of trouble. TSMC appears to be doing very well, partly because of it in video. They also supply the chips to Apple, which is trying to sell its phones in part because of their A.I. capabilities. So we're seeing this bifurcation in the market right now where you have some weak players, some struggling quite a bit, and then you have some like TSMC, like in video, like S.K.

Hynix in Korea too, that are doing very well, and TSMC committing to capital expenditure globally. Right. They're going to be building out manufacturing, not just in Asia where you usually sit. That's a very important point. For many decades, TSMC only produced its chips within Taiwan. It felt it was easier to kind of concentrate all its production in one place. And over the past few years, we've seen that business model really evolve, where they've been asked by the U.S., by Europe, by Japan to build these chip-making plants in their domestic markets, partly because of the supply chain shocks that we saw during the COVID pandemic. All these countries want to make sure that they can get those chips. TSMC is the best chip maker out there, so they want TSMC to come to the United States, to Japan, to Europe and beyond to try to make those chips and make sure that they're being produced locally.

So far, that model seems to be working pretty well.

TSMC Forecasts Lifts Chips

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