TSMC could continue to post a revenue compound annual growth rate of 15%-20% over the next five years, driven by both AI chip demand and the outsourcing by integrated device manufacturers, Morgan Stanley analysts say in a research note. TSMC’s gross margin could improve slightly to 55.5% in 4Q from 55% in 3Q, driven by strong AI chip demand and a further increase in Apple’s 3-nanometer chip output, they say. The Taiwanese semiconductor maker could maintain its gross margin around 55% in 2025 and beyond after its successful wafer price hike, which is set to take effect next year, they say. Given expectations of at least a 10% price increase for AI chips, 6% for other high-performance computing chips and 3% for smartphone chips, the 2025 price hike could average 4%-5%, lifting its gross margin by 2-3 percentage points, they add.