Taiwan Semiconductor Manufacturing Company (TSMC) has solidified its position as a leader in the AI processor market. Recent insights from El-Balad highlight TSMC’s revenue breakdown by technology, platform, and geography, revealing key factors behind its success.
Revenue Breakdown by Technology
TSMC is renowned for its advanced chip manufacturing capabilities. The company’s revenue is primarily derived from its latest semiconductor technologies. These are categorized by chip node size, measured in nanometers (nm). Smaller nodes indicate more advanced processors. Below are TSMC’s top revenue-generating chip sizes:
| Chip Size | Percentage of Revenue |
|---|---|
| 3nm | 24% |
| 5nm | 36% |
| 7nm | 14% |
| 16/20nm | 7% |
| 28nm | 7% |
This breakdown indicates that approximately 60% of TSMC’s semiconductor sales come from its most advanced processors (3nm and 5nm). Such a vast majority underscores TSMC’s manufacturing superiority within the industry.
Growth Driven by Advanced Processors
The evolution of TSMC’s revenue sources highlights its adaptability. Five years ago, smartphone manufacturing was the primary driver of TSMC’s revenue. Today, high-performance computing, particularly in AI data centers, has taken the lead.
Here is a summary of TSMC’s revenue distribution from various sectors over the last four quarters:
- High-Performance Computing: 60%
- Smartphones: 27%
- Internet of Things: 5%
- Automotive: 5%
- Digital Consumer Electronics: 1%
- Others: 2%
With AI data center infrastructure investment expected to reach $4 trillion over the next five years, TSMC is well-positioned for further growth.
Geographical Demand Dynamics
Despite being headquartered in Taiwan, TSMC generates most of its revenue from North America’s technology giants. Sales in this region have surged from slightly over 50% five years ago to around 75% today. In contrast, both China and the Asia-Pacific regions account for only 9% each.
This geographical shift reflects TSMC’s success in attracting major AI companies, including Nvidia, OpenAI, Microsoft, Meta, and Alphabet, among others.
Future Outlook for TSMC
With an estimated share of 90% in the production of the world’s most advanced processors, TSMC stands at the forefront of the semiconductor industry. Given the projected spending in AI, the company is positioned for sustained success in this market.
However, potential investors should remain cautious. The impressive gains TSMC shares have experienced over recent years were significantly bolstered by early AI advancements, suggesting that future returns, while still promising, may not be as substantial.
