tsmc defies tariff fears with strong outlook, impressive q1

2025-04-21 tsmc

taipei, Monday, 21 April 2025.
Despite looming tariffs, tsmc reports a robust first quarter in 2025. Revenue jumped 35.3% year-over-year, reaching $25.5 billion. The company anticipates no changes in customer behavior due to the trump administration’s tariffs. tsmc maintains a positive outlook for 2025. The chipmaker’s resilience signals confidence in its strategic direction. While global uncertainties persist, tsmc’s focus on advanced processes and strategic partnerships drives growth. Investors watch closely, as tsmc navigates geopolitical challenges. The company’s ability to deliver solid results amid trade tensions underscores its pivotal role in the semiconductor industry. The fact that they have not seen any changes in customer behavior is particularly intriguing.

financial highlights

The first quarter results showed a 41.6% year-over-year increase in revenue, reaching $25.3 billion [3]. Net profits surged by 60.3% [3]. High-performance computing (hpc) accounted for 59% of revenue [3]. Advanced processes (7nm and below) contributed 73% of wafer revenue [3]. These figures highlight tsmc’s strong position in the high-end semiconductor market [3]. The company’s ability to navigate seasonal smartphone demand weakness and earthquake impacts demonstrates operational resilience [3].

tariff impact and geopolitical strategy

tsmc’s management stated that the 90-day tariff reprieve has not yet affected order placement [2]. However, the long-term impact of policy changes remains under observation [2]. To mitigate geopolitical risks, tsmc is expanding its global manufacturing footprint [3]. This includes significant investments in the united states, with plans to build six wafer fabs, two advanced packaging plants, and a research center [2][3]. This expansion aims to enhance supply chain resilience and address customer ai demand [3].

manufacturing capacity and pricing

tsmc’s expansion includes accelerating its manufacturing capacity in the u.s. [2]. The company’s total investment in the u.s. will reach $165 billion [2][3]. Once completed, 30% of tsmc’s 2nm and more advanced node capacity will be located in arizona [2][3]. The increased operating costs from overseas fabs may lead to a 5% to 10% price increase for advanced process nodes in 2025 [2]. These potential price adjustments could impact mobile soc and computing chip designers [2].

ai demand and market outlook

tsmc anticipates strong ai accelerator demand, projecting a doubling of ai-related revenue in 2025 [2][3]. While ai demand is currently exceeding supply, tsmc expects a healthier supply-demand balance in 2026 [2]. The company maintains a compound annual growth rate (cagr) of 5% for ai-related revenue between 2025 and 2029 [2]. This optimistic outlook is supported by robust hpc revenue growth, which increased 7% quarter-over-quarter and accounted for 59% of total revenue in the first quarter of 2025 [2][3].

expert analysis and stock implications

Despite tsmc’s positive outlook, some analysts remain cautious due to geopolitical and macroeconomic uncertainties [5]. Yuanta investment consulting reiterated a buy rating with a target price of $1,190, while noting these short-term challenges [5]. Concerns about ai supply potentially balancing in 2026 and nvidia’s reduced cowos order forecasts have also surfaced [5]. However, tsmc’s long-term technology leadership in advanced processes and global expansion strategy are expected to drive future order growth [5]. Some reports suggest that the market believes the second half of 2025 will be conservative [6].

competitive landscape and trade dynamics

Amid escalating trade tensions between the u.s. and china, tsmc’s position remains complex [7]. While china’s retaliatory tariffs primarily target u.s.-origin goods, tsmc’s taiwan-based chip production is not directly affected [7]. This allows tsmc to ship advanced chips to chinese odm factories under preferential tariff rates [7]. However, increased u.s.-china tensions could benefit domestic chinese brands [7]. Fubon research views mediatek as a defensive stock in the taiwanese semiconductor industry due to its limited exposure to the u.s. consumer market [7].

Bronnen

tsmc earnings outlook