AI Demand Explodes--but TSMC Warns of Risks Investors Can't Ignore
TSMC (NYSE:TSM), the world's top chip foundry, is walking a tightropenavigating rising U.S. tariffs, political headwinds, and China's growing aggression toward Taiwan. But even with those risks looming, the company says it's still chasing down AI demand that refuses to cool off. At the annual shareholder meeting in Hsinchu, CEO C.C. Wei told investors that while tariffs could nudge prices higher and chip demand lower, TSMC hasn't seen customer orders drop off. In his words: AI demand has always been very strongand it's consistently outpacing supply.
That surge in demand could be what's keeping the floor under TSMC's growth story. Wei doubled down on the chipmaker's bullish 2025 outlook, citing robust orders tied to AI use caseswhere companies like Apple and Nvidia continue to lean heavily on TSMC's most advanced nodes. He noted that TSMC's top priority right now is simply producing enough chips to meet that growing appetite. Working hard, Wei said, is code for we still don't have enough. He also dismissed rumors of a UAE factory, and confirmed the company is staying tightly aligned with U.S. and Taiwanese regulationsespecially after suspending shipments to Sophgo, a Chinese chip firm under scrutiny due to its links to Huawei's AI silicon.
Still, long-term investors aren't just watching the supply chainthey're eyeing the map. With geopolitical tensions flaring across the Taiwan Strait, the question isn't just about chips anymoreit's about continuity. Wei kept his response diplomatic, stating that such scenarios are a matter for governments, not for TSMC alone. That may be true. But for now, TSMC remains one of the biggest leverage points in the global AI boomand while the road ahead isn't without bumps, demand could continue driving momentum even through turbulence.
This article first appeared on GuruFocus.
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