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# TSMC: Demand Outlook Offsets Likely Peak In Gross Margins (Archive)
- URL: https://www.huntingalphas.com/tsmc-demand-outlook-offsets-likely-peak-in-gross-margins-archive/
- Published: 2025-01-21T16:28:00.000Z
- Updated: 2026-02-28T09:34:47.000Z
- Description: TSMC’s AI-driven capex surge supports structural demand despite cyclical gross margin headwinds.
- Author: Vish (Hunting Alphas)
- Tags: 5-Minute Pitches, #noindex, Archive, #sa-origin, 2330.TW, Tech

*This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.*

## Elevator Pitch

- TSMC is set to increase FY25 capex by 34%. This is a very healthy demand signal, driven by aggressive AI-related spending and augmented by the N2 process node's ramp.
- TSMC may be at peak gross margins as dilution is expected from the ramp-up of additional capacity. But there are structural improvements too, driven by productivity and utilization increases.
- TSMC's discount vs peers has widened a little bit from what it was a few days before the Q4 FY24 earnings release.
- TSM vs SPX500 maintains a bullish structure and there are no signs of sellers despite being near a multi-quarter resistance level.
- Management's abilities to improve the estimated 5-10% gross margins of overseas fabs and elevate the lower-than-company-average margin profile of its advanced packaging facilities are a key risk monitorable.

Read the full article [here](https://seekingalpha.com/article/4750879-tsmc-demand-outlook-offsets-likely-peak-in-gross-margins?ref=huntingalphas.com).

#### Disclosures and Disclaimers

**Past performance ≠ future results. Not investment advice. See* [**full Disclaimer*](https://www.huntingalphas.com/disclaimer/)**.*