The future is now! TSMC grows 42% thanks to AI and prepares killer chips: 1.4nm

TSMC reports a 42.6% increase in revenue thanks to AI and projects 1.4nm chips by 2028. The semiconductor industry will grow 10% in 2025. Discover why this news redefines technology.

Taiwanese semiconductor giant TSMC continues its growth streak with a 42.6% revenue increase in the first five months of 2025, driven by AI. The firm plans mass production of 1.4nm chips by 2028.

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chip manufacturer and a key pillar of the global electronics supply chain, has reported extraordinary financial performance so far in 2025. The company's revenue between January and May reached 1.5 trillion New Taiwan dollars (approximately 50.1 billion US dollars), representing an impressive 42.6% year-over-year growth. This boom is directly attributed to the growing and insatiable demand for advanced chips for Artificial Intelligence (AI) applications.

TSMC's strength reflects a broader trend. Kevin Zhang, TSMC's senior vice president of global sales and business development and co-deputy chief operating officer, recently stated that the global semiconductor industry is expected to grow by more than 10% by 2025. The sector, according to Zhang, is undergoing a "vigorous" period despite recent market fluctuations, with a value that could exceed $1 trillion by 2030.

Artificial intelligence is not just a buzzword; it has established itself as the primary driver of growth and innovation in the semiconductor sector. TSMC projects that by 2030, AI applications will account for 45% of all semiconductor sales. This explosive demand is driving the need for chips manufactured using the most advanced process technologies, such as the 5 nanometer (nm), 4 nm, and 3 nm nodes, which are widely used in AI-driven applications.

This structural change justifies the colossal investments in research and development (R&D) and production capacity made by companies like TSMC. Security of supply of AI chips has become an issue of national strategic importance for major global powers, which explains the substantial government subsidies aimed at promoting domestic semiconductor production in the United States, China, the European Union, and Japan.

Looking ahead, TSMC shows no signs of slowing down in its pursuit of miniaturization and performance. The company has revealed plans to begin mass production of its advanced 14A chips (equivalent to 1.4nm) in 2028. These next-generation chips are expected to be 10% to 15% faster than future 2nm chips, or use 25% to 30% less power to deliver the same performance.

This relentless pace of innovation, reminiscent of Moore's Law, entails monumental technological and financial challenges. Only a handful of companies in the world, including TSMC, Samsung, and Intel, can compete at these technological frontiers. The cost and complexity of developing each new node are astronomical, creating a widening gap between the leaders and the rest of the industry. This concentration of cutting-edge manufacturing capacity in a few hands, and geographically in places like Taiwan, underscores the criticality of these companies to the global digital infrastructure.

While AI is currently the star, demand for semiconductors is diversifying. TSMC's Kevin Zhang also highlighted continued demand from the automotive sector, especially for autonomous driving, which requires 12nm and 8nm products, and possibly 5nm in the future.

Internet of Things (IoT) devices and smartphones will also remain significant contributors, projected to account for around 10% and 25% of semiconductor sales by 2030, respectively.

This "smartening" of virtually every aspect of modern life—from cars and homes to cities and industrial equipment—is generating sustained and varied demand for different types of chips. This not only makes the semiconductor industry more resilient overall, but also forces companies like TSMC to manage an increasingly complex technology portfolio to meet the needs of a constantly evolving global market.