Needham & Company analysts expressed confidence that Taiwan Semiconductor Manufacturing Co. is on track to achieve $110 billion in revenue in 2025. 

Investing.com — The firm raised its price target for TSMC shares to $225, up from $210 in a note Friday, as they anticipate potential upside in gross margins.

A year ago, Needham rolled forward its TSMC revenue estimates to 2025, with its initial could $110 billion figure significantly higher than the then-consensus estimate of $96 billion. 

Following a series of “beat-and-raise” quarters from TSMC, the firm said consensus has now aligned with this forecast, signaling strong market confidence in the semiconductor giant’s growth trajectory. 

“We reiterate our view that $110 billion is still the right revenue number for next year,” Needham stated.

Looking ahead, TSMC’s revenue is expected to reach approximately $90 billion in 2024, positioning the company for a substantial 23% growth in 2025. 

“Now, with TSMC’s 2024 revenue potentially reaching $90B, reaching $110B revenue in 2025, which represents 23% growth, has become a real possibility,” said Needham. “The Street has also come to this view and the consensus estimate has moved to $110B, which is a meaningful step-up from the consensus of $96B a year ago.”

The analysts believe that margins could also see significant improvements, with gross margins potentially rebounding to 60% in the second half of 2025. 

The optimistic outlook stems from the absence of N2 production, which could dilute margins if introduced prematurely.

Needham emphasizes that TSMC’s growth in 2025 is likely to be driven more by volume than by price. As the company’s N5 capacity growth stabilizes and the N3 capacity additions conclude, the analysts foresee a shift in focus from average selling price (ASP) increases to higher wafer shipments. 

For 2025, they project a 13% growth in wafer shipments, while ASP may increase by only 10%, which reflects a more conservative approach compared to prior years.