Taiwan Semiconductor Manufacturing Co (NYSE: TSM) is witnessing a seismic shift in its customer lineup as Nvidia (NASDAQ: NVDA) races to match Apple (NASDAQ: AAPL) as one of its top clients in 2025. Analysts at Bernstein report that Nvidia’s explosive growth in artificial intelligence is driving this change, while Apple remains a key player.
Nvidia is expanding its footprint at TSMC at a breakneck pace. The U.S.-based chipmaker’s contribution to TSMC revenue is expected to grow 5-10% in 2023 to the low-20s% in 2025, putting it on par with Apple. This surge stems from Nvidia’s dominance in AI, boosting demand for chips and services from the Taiwan-based chipmaker.
Bernstein points to TSMC’s AI and backend business—particularly its advanced packaging capabilities—as key growth drivers. The firm forecasts that AI will account for over 20% of TSMC’s total revenue this year, marking a significant milestone. Analysts also commend the company’s ability to manage intense production schedules, balancing Nvidia’s Blackwell, Blackwell Ultra, and Rubin chips while maintaining full capacity.
Bernstein forecasts a 40% growth in earnings per share for TSMC this year, with data center AI revenue rising from 6% of total revenue in 2023 to 14% in 2024 and over 20% in 2025. Nvidia’s graphics processing units (GPUs) remain the heavyweight, with Bernstein noting that GPUs will make up two-thirds of TSMC’s AI-related demand this year. Still, a new trend is emerging: custom ASIC chips from tech giants like Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOGL) are starting to chip away at GPU dominance, pointing to a future shift in the semiconductor landscape.
Taiwan Semiconductor Manufacturing Co (NYSE: TSM) isn’t just excelling at making chips—it’s also strengthening its backend game. Bernstein predicts the company will leapfrog ASE Technology Holding Co (NYSE: ASX) this year to become the world’s largest outsourced semiconductor assembly and test provider. This move solidifies TSMC’s growing influence across the entire chip production chain.
The firm maintained an “Outperform” rating on TSMC, setting a one-year price target of NT$1,430, implying a 30% upside.
