TLDR
- TSMC reported strong Q2 2025 results with revenue up 17.8% to $30.1 billion and earnings per share jumping 60.7% year-over-year
- Management raised full-year revenue growth guidance to around 30% in USD driven by AI and high-performance computing demand
- Advanced technologies (3nm and 5nm) now account for 74% of wafer revenue, with HPC representing 60% of total revenue
- The company is expanding US operations with $165 billion investment and plans to move 2nm production to Arizona by end of 2026
- Stock rose 4% after earnings as TSMC approaches $1 trillion market cap, benefiting from being the primary supplier to both NVIDIA and AMD
Taiwan Semiconductor Manufacturing Company delivered another quarter that shows why it sits at the center of the AI revolution. The world’s largest contract chipmaker posted Q2 2025 results that had investors reaching for their calculators.
Revenue climbed to $30.1 billion, marking a 17.8% jump from the previous quarter in USD terms. That’s the kind of growth that gets Wall Street’s attention, especially when it comes with an earnings per share surge of 60.7% year-over-year to NT$15.36.
The gross margin story tells you everything about TSMC’s pricing power. Even with foreign exchange headwinds trying to knock it down, the company held its gross margin steady at 58.6%. Mid-90s capacity utilization rates and cost efficiencies did the heavy lifting here.
Management wasn’t shy about raising their expectations either. Full-year revenue growth guidance jumped to around 30% in USD terms. The driver? Sustained demand from AI and high-performance computing customers who can’t get enough of TSMC’s advanced chips.
But here’s where it gets interesting for Q4. Management flagged some caution around tariffs and broader economic risks. Smart money always watches for these kinds of management comments.
Advanced Nodes Drive the Bus
The numbers behind TSMC’s advanced technology portfolio paint a clear picture. Advanced technologies now represent 74% of wafer revenue, with 3nm and 5nm processes leading the charge.
High-performance computing has become the company’s bread and butter, accounting for 60% of total revenue. Sovereign AI projects and edge AI development are feeding this growth machine. When governments start building their own AI capabilities, someone has to make the chips.
The company isn’t standing still either. TSMC is pushing ahead with N2 node production scheduled for the second half of 2025. Advanced packaging capabilities are getting ramped up to meet AI demand that shows no signs of slowing down.
Geographic Expansion Accelerates
TSMC’s US expansion plans keep getting bigger. The company has committed $165 billion to US fabs, a number that would make most countries jealous. This isn’t just about diversifying manufacturing either.
The plan to transfer 2nm production to Arizona by the end of 2026 represents a major shift. Just a few years ago, TSMC had zero US production. Now they’re talking about bringing their most advanced processes stateside.
This geographic diversification comes at a time when geopolitical tensions continue to shape semiconductor supply chains. Companies and governments want chip production closer to home.
The market responded predictably to the earnings beat. Shares jumped 4% post-earnings, pushing TSMC’s market cap closer to the $1 trillion mark. Analysts are calling these results a bellwether for AI momentum across the sector.
Forward price-to-earnings ratios of 24-25 times reflect what many see as a reasonable premium for a company this central to AI infrastructure. Institutional sentiment remains positive with many analysts seeing 10-15% upside from current levels.
TSMC faces its share of headwinds. Foreign exchange volatility, overseas fab dilution, geopolitical tensions, and packaging bottlenecks all create complexity. But the company’s scale and technology leadership provide some insulation from these challenges.
The company holds 187 hedge fund positions as of the first quarter, essentially unchanged from the previous quarter. NVIDIA and AMD both rely heavily on TSMC for their most advanced AI chips, creating a situation where TSMC benefits regardless of which company wins specific design wins.
TSMC’s stock has gained approximately 27.92% since previous bullish coverage in May 2025, as the AI-driven thesis continues to play out according to recent analysis.
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