By Wen-Yee Lee and Faith Hung

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co, the leading global producer of advanced chips used in artificial intelligence applications, is expected to report a 58% jump in fourth-quarter revenue in Thursday due to increased demand.

The world’s largest contract chipmaker, whose customers include Apple (NASDAQ:) and Nvidia (NASDAQ:), benefited from the megatrend towards AI. But the Taiwanese company faces headwinds from the US government’s technology restrictions on China and uncertainty about the incoming administration of President-elect Donald Trump, which has threatened broad import tariffs.

TSMC is set to report a net profit of T$377.95 billion ($11.41 billion) for the quarter ended Dec. 31, according to an LSEG SmartEstimate drawn from 22 analysts. SmartEstimates gives more weight to forecasts from analysts that are more often accurate.

That estimate compares to 2023 fourth quarter net income of T$238.7 billion.

TSMC last week reported a jump in fourth-quarter earnings in Taiwan dollars, comfortably beating market expectations. The company gave its earnings outlook in US dollars in its quarterly earnings call, scheduled for 0600 GMT on Thursday.

Brett Simpson, co-founder and senior analyst at Arete Research, said that 2025 will be another year in which TSMC’s growth is largely driven by AI customers.

“From the point of view of the US government, Arete is optimistic that TSMC will build a good relationship with the new administration especially since the new fab cluster in Arizona is the largest foreign direct investment project in the US for now,” he added.

TSMC is spending billions of dollars on new factories overseas, including $65 billion in three plants in the US state of Arizona, although it has said most manufacturing will remain in Taiwan.

Edward Chen, chairman of Fubon Financial’s securities investment unit, said the Arizona fab’s progress and its yield rates, or the percentage of usable chips, will be important for the company.

“Furthermore, the impact of tariffs imposed by the incoming Trump administration on demand remains to be seen,” he added.

TSMC, in its earnings call, will update its outlook for the current quarter as well as the full year, including planned capital spending as it races to expand production.

In its last earnings call in October, TSMC said capital spending was likely to be higher in 2025 than last year, though it did not provide a number.

In the call, it predicted 2024 capital spending of just under $30 billion.

The AI ​​boom has helped boost the share price of Asia’s most valuable company, with TSMC’s Taipei-listed stock up 81% over the past year, compared with a 28.5% gain for the broader market.

($1 = 33.1280 Taiwan dollars)