TSMC's revenue increased 8.4% in Q1 2025 from the previous quarter to $35.9 billion, with strong demand from the artificial intelligence boom driving profits, according to major media reports. The company expects full-year revenue in U.S. dollar terms to grow more than 30% in 2025, TSMC said. Revenue from advanced 3-nanometer chips now accounts for a quarter of TSMC's sales, up from 6% in Q3 2023, according to research from three sources.
TSMC is expanding chip fabrication plants in the U.S., Japan, and Taiwan, with expansion focusing on making more advanced 3-nanometer semiconductors used in smartphones and AI products. The company's 3-nm production plans in the U.S. are part of a $165 billion planned investment in chip factories in Arizona. TSMC's capital spending for the next three years will be significantly higher than the past three years, according to major media reports citing the company. TSMC expects capital spending in 2026 to be toward the higher end of the $52 billion-$56 billion range.
TSMC's Taipei-listed shares have gained 35% so far this year, with a market capitalization of around $1.7 trillion, according to research from three sources. The war in the Middle East is threatening to disrupt supply of production materials for semiconductors such as helium and hydrogen. The Iran war is driving up costs for TSMC, according to major media reports.
TSMC has prepared safety stock inventory on hand, including for helium, and is not expecting any near-term impact on operations, the company confirmed.
The United States-Israeli war on Iran and Tehran's retaliatory strikes have upended global financial and energy markets, according to research from three sources. Since the US-Israeli strikes on Iran began on February 28, Tehran has launched ballistic missiles targeting Israel, US military bases, oil depots, and other infrastructure across the Gulf region, multiple reports indicate. Iranian attacks on vessels in the Strait of Hormuz have dramatically reduced traffic in the channel, through which about 20% of global oil and gas supplies transit, sources said. Iran attacked fuel tankers in Iraqi waters on Thursday, according to research from three sources.
As of Monday morning, Brent crude was priced at $106 per barrel, up more than 40% from $72 per barrel on February 27, multiple reports indicate. LNG prices have risen almost 60% since the start of the war, according to Muyu Xu, senior crude oil analyst at Kpler. On March 2, QatarEnergy suspended its LNG production after an Iranian drone attack, straining the global LNG market, sources said. Prices of refined products have seen significant increases and are expected to continue rising if energy flows through the Strait of Hormuz remain largely shut, Muyu Xu noted.
As crude oil and refined products from the Middle East Gulf are unable to reach buyers, countries in Asia are scrambling to secure alternative supplies at higher prices and adopt emergency measures, according to Muyu Xu. About 84% of crude oil and 83% of LNG that passed through the Strait of Hormuz in 2024 was bound for Asia, according to data from the US Energy Information Administration. China, India, Japan, and South Korea accounted for nearly 70% of oil shipments through the strait, with about 15% bound for the rest of Asia, the data shows.
If the conflict is short-lived and Iranian attacks cease, oil and LNG prices would fall back sharply with Brent crude reaching $65 per barrel by year-end, according to a March 9 report by Neil Shearing and his team at Capital Economics. In case of a longer war, oil prices would rise further to around $130 per barrel in Q2, and shipments through the Strait of Hormuz would be affected, the report stated.
Global commodity prices are set to tumble to a five-year low in 2025 amid an oil glut that is likely to limit price effects even of a wider conflict in the Middle East, according to the World Bank's latest Commodity Markets Outlook. Overall commodity prices will remain 30% higher than in the five years before the COVID-19 pandemic, the report indicated. Next year, global oil supply is expected to exceed demand by an average of 1.2 million barrels per day, a glut exceeded only twice before in 2020 and 1998, the World Bank projected. The oversupply partly reflects a major shift in China, where oil demand has essentially flatlined since 2023 amid industrial slowdown and increased sales of electric vehicles and LNG-powered trucks, according to the report.
Several non-OPEC+ countries are expected to ramp up oil production, and OPEC+ maintains significant spare capacity of 7 million barrels per day, almost double the amount in 2019, the World Bank noted. From 2024 through 2026, global commodity prices are projected to plummet by nearly 10%, the institution forecast. Global food prices are set to fall 9% this year and an additional 4% in 2025 before leveling off, leaving them nearly 25% above the 2015-2019 average, according to the World Bank's outlook. Energy prices are expected to drop by 6% in 2025 and an additional 2% in 2026, the report stated.
Falling food and energy prices should make it easier for central banks to control inflation, but an escalation in armed conflicts could complicate that by disrupting supply and driving up prices, the World Bank warned. High prices, conflict, extreme weather, and other shocks have made more than 725 million people food insecure in 2024, according to the institution's report. Conflict in the Middle East has brought significant volatility to oil prices over the past year due to concerns about damage to oil and gas infrastructure, the World Bank noted.
Assuming the conflict does not intensify, the annual average price of Brent crude is expected to fall to a four-year low of $73 in 2025, down from $80 a barrel this year, according to the World Bank's outlook. If the conflict escalates and reduces global oil supply by 2% (2 million barrels per day) by year-end, it would cause significant disruption, the institution projected.
The specific measures Asian countries are taking to secure alternative oil and LNG supplies, and at what cost, remain unclear. How much TSMC's costs have increased due to the Iran war, and what is the projected impact on its profitability, remains uncertain. When QatarEnergy will resume LNG production, and what is the current status of the Strait of Hormuz traffic, are also unknown. How other major semiconductor companies such as Samsung and Intel are being affected by the supply chain disruptions from the war has not been detailed.