TSMC October Sales Analysis: AI Chip Boom Sustainability Debate

This analysis examines TSMC’s October 2025 sales performance and its implications for the AI semiconductor market. The company reported consolidated revenue of NT$367.47 billion ($11.86 billion), representing a 16.9% year-over-year increase [1][2][3]. While this represents TSMC’s highest-ever monthly sales figure, surpassing the previous record of NT$349.57 billion from April 2025, the growth rate marks the slowest pace since February 2024 [1][2].

The market reaction reflects a complex paradox: TSMC shares trade at $292.11 with remarkable year-to-date gains of 44.91% and a 52-week high of $311.37 [0], yet concerns about growth moderation have emerged. Analyst consensus remains strongly bullish with 72.7% buy ratings and a consensus price target of $360.00, representing 23.2% upside potential [0].

Several factors contribute to the current market debate:

: Sequential growth of 11% from September and year-to-date sales up 33.8% to NT$3.13 trillion demonstrate continued demand momentum [2]. The company’s exceptional profitability metrics (42.92% net margin, 33.60% ROE) support fundamental strength [0].

: Despite growth deceleration concerns, major customers continue aggressive expansion. Nvidia’s CEO Jensen Huang reportedly requested a 45-50% increase in TSMC’s 3nm wafer production to meet overwhelming Blackwell accelerator demand [4]. Major hyperscalers (Google, Amazon, Microsoft) maintain massive AI infrastructure spending while developing custom chips [4].

: TSMC projects AI-related chip sales CAGR exceeding 45% from 2024-2029, above previous estimates [2]. The company provided Q4 guidance of NT$309-327.3 billion monthly sales [2].

The growth deceleration may reflect healthy market maturation rather than demand saturation. As revenue bases expand, maintaining explosive percentage growth becomes mathematically challenging. The transition from early-stage adoption to sustainable expansion phases typically involves growth rate moderation while absolute performance remains strong.

A critical insight emerges from the divergence between customer demand signals and TSMC’s growth trajectory. While major customers aggressively seek increased capacity, TSMC’s growth moderation suggests either supply constraints or strategic capacity management. This creates potential risks of customer dissatisfaction or competitive displacement if supply gaps persist.

Current valuation metrics (P/E ratio of 32.46x) [0] may face pressure if growth continues moderating, particularly given broader technology sector weakness (-1.35% today) [0]. The market appears to be reassessing AI-related valuations across the semiconductor ecosystem, creating potential volatility.

1. Growth Sustainability Concerns
   : Continued deceleration could challenge current valuation multiples and investor expectations [0][1]
2. Currency Impact
   : Taiwan dollar strengthening may affect reported revenue in USD terms [1]
3. Competitive Pressure
   : Samsung and others scaling 8-inch chip production could affect market dynamics [5]
4. Geopolitical Exposure
   : US-China tech tensions and Taiwan Strait stability remain critical considerations

1. Capacity Expansion
   : Meeting Nvidia’s 45-50% increased 3nm wafer demand could secure long-term customer relationships [4]
2. Process Technology Leadership
   : 2nm and A14 process technology rollout could maintain competitive advantages [5]
3. AI Market Expansion
   : TSMC’s 45%+ AI CAGR projection suggests substantial market growth potential [2]

• November/December sales performance against Q4 guidance [2]
• Customer inventory levels and ordering patterns
• New process node adoption rates and customer commitments
• Capacity utilization across different process nodes
• Geopolitical developments affecting supply chain stability

TSMC’s October sales performance presents a nuanced picture of the AI semiconductor market at a potential inflection point. While absolute revenue continues setting records and major customers demand increased capacity, the growth rate deceleration to 16.9% YoY - the slowest since February 2024 - has sparked debate about AI chip demand sustainability [1][2][3].

The company’s fundamentals remain exceptional with strong profitability metrics and analyst consensus price targets suggesting 23.2% upside potential [0]. However, the transition from explosive growth to sustainable expansion may create near-term volatility as investors reassess AI-related valuations.

Critical information gaps include specific forward guidance details, current capacity utilization rates, pricing trends, and geographic demand breakdown. The divergence between continued strong absolute performance and moderating growth rates requires careful monitoring of forward indicators and customer demand patterns to assess whether this represents healthy market maturation or early signs of demand plateau.

The situation highlights the importance of distinguishing between growth rate moderation and demand deterioration, particularly in context of TSMC’s record absolute performance and strong customer demand signals from major AI chip manufacturers [4].