According to a report by Morgan Stanley analysts, TSMC (TSM, Financial) is expected to sustain a compound annual growth rate (CAGR) of 15%-20% over the next five years. This growth is propelled by increasing demand for AI chips and outsourced business from integrated device manufacturers.
In the fourth quarter, TSMC's gross margin is projected to slightly increase to 55.5% from the previous quarter's 55%, driven by robust demand for AI chips and an increase in the production of Apple's 3nm chips. Following a successful rise in wafer prices, set to take effect next year, TSMC's gross margin is anticipated to remain around 55% in 2025 and beyond.
Analysts note that AI chip prices are expected to increase by at least 10%, with other high-performance computing chips set to rise by 6% and smartphone chips by 3%. The overall price increase in 2025 is projected to average 4%-5%, potentially lifting TSMC's gross margin by 2-3 percentage points.
