tsmc surges as ai demand fuels record earnings

2025-07-23 tsmc

Hsinchu, Wednesday, 23 July 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) reported outstanding second-quarter earnings. The company’s revenue reached $30.07 billion, marking a 44.4% year-over-year increase. Net profits jumped by 60.7%, totaling $12.8 billion. Demand for AI chips drove this growth, with AI-related revenue exceeding $10 billion for the first time, making up over a third of total revenue. TSMC anticipates continued strength in AI, projecting its AI revenue to double in 2025. This surge highlights TSMC’s pivotal role in the AI revolution and its robust financial performance.

Financial highlights

TSMC’s second-quarter earnings showcased significant growth, with revenue reaching $30.07 billion [3]. This represents a 44.4% increase year-over-year and a 17.8% increase sequentially [3]. Net profit soared to $12.8 billion, a 60.7% increase compared to the same period last year [3]. The company’s gross margin stood at 58.6%, while the operating profit margin was 49.6% [3]. These figures highlight TSMC’s strong financial health and efficient operations amid rising demand for its advanced semiconductor technologies [3].

ai driving growth

The surge in AI chip demand is significantly reshaping TSMC’s revenue structure [3]. AI-related revenue surpassed $10 billion for the first time, constituting over one-third of the company’s total revenue [3][7]. High-performance computing (HPC), crucial for AI applications, now accounts for 60% of TSMC’s revenue, dwarfing smartphone revenue at 27% [3]. TSMC CEO Wei Zhejia anticipates this trend to continue, projecting AI revenue to double in 2025, reaching approximately $26.8 billion [3]. This transition underscores the growing importance of AI in TSMC’s business [3].

advanced technology leadership

TSMC’s dominance in advanced process technologies is a key factor in its success [3]. Advanced processes, including 3nm, 5nm, and 7nm, contributed 74% of total wafer revenue [3]. Specifically, 5nm accounted for 36% and 3nm for 24% of the wafer revenue [3]. The company is also on track to begin mass production of its 2nm process in the second half of 2025, utilizing gate-all-around (GAA) architecture for enhanced performance [3]. TSMC’s technological advancements solidify its competitive edge in the semiconductor industry [3].

capacity expansion and geopolitical strategy

To meet growing demand and mitigate geopolitical risks, TSMC is expanding its global footprint [3]. The company plans to build 11 new wafer fabs in Taiwan and is progressing with the mass production of 4nm and more advanced processes in Arizona, USA [3]. This diversification strategy aims to strengthen TSMC’s role in the global supply chain while addressing regional concerns [3]. These strategic moves ensure TSMC remains a critical player in the semiconductor landscape despite potential disruptions [3].

stock market impact and analyst views

Following the earnings release, several analysts have raised their target prices for TSMC [4]. The stock has shown strong performance, with shares listed in Taipei increasing by 44% since April and U.S. depositary receipts rising nearly 70% to reach record highs [4]. Market optimism is fueled by the anticipated increase in product prices and the ongoing AI boom [4]. Analysts predict TSMC’s revenue will grow by approximately 30% in 2025 [4]. This positive outlook reflects confidence in TSMC’s continued growth and market leadership [4].

potential risks and uncertainties

Despite the positive outlook, TSMC faces potential challenges [1]. Geopolitical tensions and currency fluctuations could impact profitability [3][4]. Analysts at Morningstar suggest that foreign exchange factors might reduce gross margins by 2 to 3 percentage points [4]. Moreover, investors should be aware of the risks associated with investing in semiconductor funds, including potential loss of principal and market volatility [1]. TSMC’s ability to navigate these uncertainties will be crucial for sustaining its growth trajectory [alert! ‘These are general sector risks, not specific to TSMC’] [1][4].

Bronnen

ai chips tsmc earnings