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Core Insights - TSMC reported consolidated revenue of approximately NT$989.92 billion for Q3 2025, with a net profit after tax of NT$452.3 billion and earnings per share of NT$17.44, equivalent to US$2.92 per American Depositary Share [1] Financial Performance - Year-over-year, Q3 2025 revenue increased by 30.3%, net profit after tax rose by 39.1%, and earnings per share grew by 39.0% [1] - Quarter-over-quarter, Q3 2025 revenue increased by 6.0%, net profit after tax increased by 13.6% [1] - In US dollar terms, Q3 2025 revenue was US$33.1 billion, reflecting a 40.8% increase year-over-year and a 10.1% increase quarter-over-quarter [1] Profitability Metrics - Q3 2025 gross margin was 59.5%, operating margin was 50.6%, and net profit margin was 45.7% [1]

Core Insights - Taiwan Semiconductor Manufacturing reported a record quarterly net profit that significantly exceeded expectations [1] Financial Performance - The company achieved a record quarterly net profit, indicating strong financial health and operational efficiency [1] Market Expectations - The reported profit surpassed market expectations, suggesting positive investor sentiment and confidence in the company's future performance [1]

受益于人工智能基础设施投资热潮加速，台积电最新财报显示净利润同比增长39%，超出市场预期，创下历史新高。 | Selected Items from Statements of Comprehensive Income | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 3Q25 | 3Q25 | 2025 | 3Q24 | 3Q25 Over | 3Q25 Over | | (In NT$ billions unless otherwise noted) | | Guidance | | | 2Q25 | 3Q24 | | Net Revenue (US$ billions) | 33.10 | 31.8-33.0 | 30.07 | 23.50 | +10.1% | +40.8% | | Net Revenue | 989.92 | | 933.79 | 759.69 | +6.0% | +30.3% | | Gross Margin | 59.5% | 55.5%-57.5% | 58.6% | 57.8% | +0.9 ppts ...

Group 1 - Charles Schwab Corp. is expected to report quarterly earnings of $1.25 per share on revenue of $5.99 billion [2] - J B Hunt Transport Services Inc. reported quarterly earnings of $1.76 per share, exceeding the consensus estimate of $1.47, with revenue of $3.05 billion, beating the Street estimate of $3.02 billion [2] - Travelers Companies Inc. is anticipated to post quarterly earnings of $6.29 per share on revenue of $11.81 billion [2] - Taiwan Semiconductor Manufacturing Company Ltd. reported a 39.1% increase in profit for the third quarter, surpassing market expectations [2] - US Bancorp is expected to report quarterly earnings of $1.13 per share on revenue of $7.16 billion [2]

Group 1 - The core viewpoint is that factory and cleanroom engineering are essential components for the expansion of the AI computing power industry chain, with cleanrooms providing controlled environments necessary for the production of precision products such as wafers, chip substrates, packaging, consumer electronics, and server assembly [1] - Investment in factory and cleanroom engineering typically accounts for 10-20% of total investment, and the global demand for cleanroom engineering is rapidly increasing, particularly in North America, which is identified as the market with the greatest potential [1][3] - The surge in investment intensity has led to saturation among primary suppliers involved in factory construction, and the long training cycle for new engineers makes it difficult to meet the short-term spike in demand, resulting in an inevitable overflow of orders [1][3] Group 2 - Supply chain security and AI computing power are the two core factors driving global chip expansion, with the mature process chip expansion being driven by risk-averse demand and the advanced process chip expansion being driven by AI computing power demand [2] - TSMC holds 90% of the global advanced process capacity and is significantly accelerating capacity expansion in Taiwan and the United States through substantial capital expenditures [2] Group 3 - Investment recommendations highlight Shenghui Integrated (603163.SH) and Yaxiang Integrated (603929.SH) as key players in the cleanroom engineering sector, with Shenghui expected to benefit from expanding overseas business and significant growth in revenue and profit [4] - Shenghui's new orders increased by 70% in the first half of 2025, with a 63% increase in orders on hand compared to the end of the previous year, and a projected net profit growth of 24.1% to 47.9% from 2025 to 2027 [4] - Yaxiang is benefiting from the restructuring of the global semiconductor supply chain and has secured major overseas wafer factory projects, with expectations of continued significant orders due to ongoing demand for semiconductor capacity expansion in Singapore [4]

Key TakeawaysTaiwan Semiconductor Manufacturing Company (TSM) is experiencing robust demand for AI chips, leading to tight manufacturing capacity, particularly for CoWoS advanced packaging, with significant expansion planned through 2026.Toyota Motor Corporation (TM) has had its 'A+' credit rating reaffirmed by S&P Global and Fitch, with Moody's affirming its A1 rating, all maintaining a stable outlook due to strong hybrid sales and conservative financial management.Japan's political landscape is in flux as ...

Financial Highlights - Third quarter revenue increased 10.1% sequentially to $33.1 billion, slightly above guidance, driven by strong demand for leading-edge process technologies [3][11] - Gross margin rose 0.9 percentage points sequentially to 59.5%, primarily due to cost improvements and higher capacity utilization [3][7] - Operating margin increased 1.0 percentage point sequentially to 50.6% [3] - EPS was TWD 17.44, up 39% year-over-year, with ROE at 37.8% [3] - Cash and marketable securities totaled TWD 2.8 trillion ($90 billion) at the end of the quarter [4] Business Line Performance - 3 nm process technology contributed 23% of wafer revenue, while 5 nm and 7 nm accounted for 37% and 14% respectively [4] - Revenue from the smartphone segment increased 19% to account for 30% of total revenue, while IoT and automotive segments grew by 20% and 18% respectively [4] - Data Center Equipment (DCE) revenue decreased by 20% to account for 1% of total revenue [4] Market Data - The company expects fourth quarter revenue to be between $32.2 billion and $33.4 billion, representing a 1% sequential decrease or a 22% year-over-year increase at the midpoint [6][7] - Full-year 2025 revenue is expected to increase by close to mid-30% year-over-year in U.S. dollar terms [11] Company Strategy and Industry Competition - TSMC is focusing on maintaining technology leadership and manufacturing excellence while investing in advanced process technologies to support AI-related demand [9][12] - The company is narrowing its 2025 CapEx range to $40 billion to $42 billion, with 70% allocated for advanced process technologies [10] - TSMC is expanding its global manufacturing footprint, including capacity expansion in Arizona and Japan, to meet strong multi-year AI-related demand [17][18] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about AI-related demand, expecting it to continue driving growth [11][13] - There are uncertainties regarding tariff policies that could impact consumer-related markets, but management is focused on technology leadership and customer trust [12] - The company is preparing for a structural increase in long-term market demand, particularly in AI applications [15] Other Important Information - TSMC's advanced packaging revenue is approaching 10% of total revenue, highlighting its importance in the competitive landscape [102] - The company is working closely with customers to ensure capacity meets demand, particularly in the AI sector [15][16] Q&A Session Summary Question: AI Demand Growth - Management confirmed that AI demand continues to be strong, with expectations for growth rates potentially exceeding previous mid-40% CAGR forecasts [26][27] Question: CapEx Outlook - Management indicated that CapEx will correlate with business opportunities, and they expect to continue investing to support growth [29][30] Question: CoWoS Capacity - Management is working to narrow the gap between demand and supply for CoWoS capacity, with updates expected next year [32] Question: Advanced Packaging Expansion - TSMC is building two advanced packaging fabs in Arizona and collaborating with partners to meet customer needs [75] Question: Revenue Growth Drivers - Growth is expected to be driven by technology migration, ASP increases, and volume growth [76][78] Question: AI Data Center Capacity - Management noted that 1 GW of AI data center capacity could require significant investment, but specific wafer demand figures are not yet available [89] Question: Competition and Strategic Initiatives - TSMC is focusing on system performance and advanced packaging to strengthen its competitive position in the Foundry 2.0 landscape [102] Question: Concerns about Prebuilt Inventory - Management expressed no concerns about prebuilt inventory levels, indicating they are at healthy seasonal levels [105]

Financial Highlights - In Q3 2025, revenue increased by 6% sequentially in NT and by 10.1% in USD to $33.1 billion, slightly exceeding guidance [5][6] - Gross margin rose by 0.9 percentage points sequentially to 59.5%, driven by cost improvements and higher capacity utilization [6][12] - Operating margin increased by 1.0 percentage point sequentially to 50.6% [6] - EPS was up 39% year over year, and ROE was 37.8% [6] Business Line Performance - Three nanometer process technology contributed 23% of wafer revenue, while five nanometer and seven nanometer accounted for 37% and 14% respectively [7] - Advanced technologies (seven nanometer and below) made up 74% of wafer revenue [7] - Revenue contribution by platform: HPC remained flat at 57%, smartphone increased by 19% to 30%, IoT grew by 20% to 5%, automotive rose by 18% to 5%, while DCE decreased by 20% to 1% [7][8] Market Data - Cash and marketable securities at the end of Q3 were NT2.8 trillion (approximately $90 billion) [8] - Current liabilities decreased by NT101 billion quarter over quarter, mainly due to a reduction in accrued liabilities [8] Company Strategy and Industry Competition - TSMC is narrowing its 2025 CapEx guidance to between $40 billion and $42 billion, with 70% allocated for advanced process technologies [14] - The company aims to leverage its manufacturing technology leadership and large-scale production to remain the most efficient and cost-effective manufacturer [13] - TSMC is expanding its global manufacturing footprint, with significant investments in Arizona, Japan, and Europe to meet strong AI-related demand [22][24] Management Commentary on Operating Environment and Future Outlook - Management expects continued strong demand for leading-edge process technologies, particularly in AI, with full-year 2025 revenue projected to increase by close to mid-thirties percent year over year in USD terms [16][17] - There are uncertainties regarding tariff policies that could impact consumer-related markets, but TSMC remains focused on technology leadership and customer trust [17][20] - The company is preparing for a structural increase in long-term market demand, particularly in AI applications, and is employing a disciplined capacity planning process [20][21] Other Important Information - TSMC's two nanometer technology is on track for volume production later this quarter, with expectations for a faster ramp in 2026 [25][26] - The company is also introducing N2P as an extension of its N2 family, with volume production scheduled for the second half of 2026 [26] Q&A Session Summary Question: AI Demand Growth - Management confirmed that AI demand continues to be strong, with expectations for growth rates potentially exceeding previous mid-forties CAGR guidance [34][35] Question: CapEx Outlook - Management indicated that CapEx will correlate with growth opportunities, and while it is unlikely to drop significantly, it may increase in response to strong demand [38][40] Question: AI Infrastructure and Token Growth - Management acknowledged that token growth is expected to be exponential, and TSMC's technology will enable customers to handle increased demand effectively [78][84] Question: Competition and Strategic Initiatives - TSMC is focusing on Foundry 2.0 to enhance system performance and is working closely with customers to maintain competitive advantages [112][113] Question: Smartphone Demand and Prebuild Concerns - Management expressed no concerns about prebuild inventory levels, indicating that they are currently healthy and at seasonal levels [117]

Financial Highlights - Third quarter revenue increased 10.1% sequentially to $33.1 billion, slightly exceeding guidance, driven by strong demand for leading-edge process technologies [3][10] - Gross margin rose 0.9 percentage points sequentially to 59.5%, attributed to cost improvements and higher capacity utilization, despite foreign exchange challenges [3][6] - Operating margin increased 1.0 percentage point sequentially to 50.6% [3] - Earnings per share (EPS) was 17.44 NT, up 39% year over year, with a return on equity (ROE) of 37.8% [3] Business Line Performance - Revenue contribution from 3-nanometer process technology was 23%, while 5-nanometer and 7-nanometer accounted for 37% and 14% respectively [4] - High-Performance Computing (HPC) remained flat at 57% of revenue, while smartphone revenue increased 19% to 30%, IoT grew 20% to 5%, and automotive rose 18% to 5% [4] - Data Center Equipment (DCE) revenue decreased 20% to 1% [4] Market Data - The company ended the third quarter with cash and marketable securities of 2.8 trillion NT ($90 billion) [4] - Current liabilities decreased by 101 billion NT, mainly due to a reduction in accrued liabilities [4] Company Strategy and Industry Competition - TSMC is narrowing its 2025 capital expenditures (CAPEX) guidance to between $40 billion and $42 billion, with 70% allocated for advanced process technologies [9] - The company expects gross margin dilution from overseas fabs to be between 1% to 2% for the full year 2025, improved from previous estimates [7] - TSMC aims to leverage its manufacturing technology leadership and large-scale production to remain competitive [8] Management Commentary on Operating Environment and Future Outlook - Management noted strong AI-related demand and a mild recovery in non-AI segments, projecting full-year 2025 revenue growth of close to mid-30% year over year in U.S. dollar terms [10][11] - The company remains cautious about potential tariff impacts on consumer-related markets but is committed to investing in future megatrends [11] - TSMC is focused on technology leadership, manufacturing excellence, and customer trust to strengthen its competitive position [11] Other Important Information - TSMC is expanding its global manufacturing footprint, with significant progress in Arizona and plans for additional fabs in Japan and Germany [16][17] - The company is preparing for the ramp-up of its 2-nanometer technology, with volume production expected later this quarter [18] Q&A Session Summary Question: AI Demand Growth - Management confirmed that AI demand is stronger than previously anticipated, with an expected CAGR in the mid-40% range for AI accelerators [21][24] Question: CAPEX Outlook - Management indicated that CAPEX will correlate with business opportunities, and they will continue to invest as long as growth opportunities exist [26][27] Question: CoWoS Capacity - Management is working to increase CoWoS capacity to meet demand but did not provide specific numbers for 2026 [30] Question: Competition and Foundry 2.0 - TSMC is focusing on system performance and advanced packaging as part of its Foundry 2.0 strategy to enhance competitiveness [74][76] Question: Smartphone Prebuilt Concerns - Management expressed no concerns about prebuilt inventory levels, indicating they are healthy and seasonal [79]