TSMC(TSM) - 2025 Q2 - Quarterly Results

Q2 2025 Financial & Operational Highlights Q2 2025 Financial Performance Summary In the second quarter of 2025, TSMC reported strong financial results, exceeding guidance with net revenue of NT$933.79 billion, marking a 38.6% year-over-year increase Q2 2025 Key Financial Metrics | Metric | 2Q25 | vs. 1Q25 | vs. 2Q24 | | :--- | :--- | :--- | :--- | | Net Revenue (NT$B) | 933.79 | +11.3% | +38.6% | | Net Revenue (US$B) | 30.07 | +17.8% | +44.4% | | Gross Margin | 58.6% | -0.2 ppts | +5.4 ppts | | Operating Margin | 49.6% | +1.1 ppts | +7.1 ppts | | Net Income (NT$B) | 398.27 | +10.2% | +60.7% | | Diluted EPS (NT$) | 15.36 | +10.2% | +60.7% | | Wafer Shipment (Kpcs, 12"-equiv.) | 3,718 | +14.1% | +19.0% | Q2 2025 Revenue Breakdown Advanced technologies (7nm and below) constituted 74% of total wafer revenue, with 3nm and 5nm processes being the largest contributors at 24% and 36% respectively - Advanced technologies, defined as 7-nanometer and more advanced, accounted for 74% of total wafer revenue in Q2 2025[36][45] Q2 2025 Revenue by Technology | Technology | Revenue Contribution | | :--- | :--- | | 3nm | 24% | | 5nm | 36% | | 7nm | 14% | | Advanced (≤7nm) | 74% | Q2 2025 Revenue by Platform | Platform | Revenue Contribution | | :--- | :--- | | High Performance Computing (HPC) | 60% | | Smartphone | 27% | | Internet of Things (IoT) | 5% | | Automotive | 5% | Balance Sheet & Key Indices As of the end of Q2 2025, TSMC maintained a strong balance sheet with total assets of NT$7,006.35 billion Selected Balance Sheet Items (NT$ Billions) | Item | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Cash & Marketable Securities | 2,634.43 | 2,703.09 | 2,048.64 | | Total Assets | 7,006.35 | 7,133.29 | 5,982.36 | | Total Liabilities | 2,389.72 | 2,531.66 | 2,162.22 | | Total Shareholders' Equity | 4,616.63 | 4,601.63 | 3,820.14 | Key Indices | Index | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | A/R Turnover Days | 23 | 28 | 28 | | Inventory Turnover Days | 76 | 83 | 83 | | Current Ratio (x) | 2.4 | 2.4 | 2.5 | Cash Flow Summary In Q2 2025, TSMC generated NT$497.07 billion in cash from operating activities, with capital expenditures of NT$297.22 billion Q2 2025 Cash Flow Highlights (NT$ Billions) | Item | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Cash from operating activities | 497.07 | 625.57 | 377.67 | | Capital expenditures | (297.22) | (330.83) | (205.68) | | Free Cash Flow* | 199.85 | 294.74 | 171.99 | | Cash dividends | (116.70) | (103.72) | (90.76) | | Ending Balance | 2,364.52 | 2,394.80 | 1,799.13 | Management Report and Analysis Revenue Analysis Q2 revenue increased 11.3% sequentially, driven by strong demand for industry-leading 3nm and 5nm technologies, partially offset by an unfavorable foreign exchange rate - The 11.3% quarter-over-quarter revenue increase was supported by strong demand for 3nm and 5nm technologies, despite an unfavorable foreign exchange rate[45] - Revenue from the HPC platform grew 14% sequentially, while the Automotive platform's revenue remained flat[46] Revenue by Geography | Geography | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | North America | 75% | 77% | 65% | | China | 9% | 7% | 16% | | Asia Pacific | 9% | 9% | 9% | | Japan | 4% | 4% | 6% | | EMEA | 3% | 3% | 4% | Profit & Expense Analysis The company's profitability remained strong in Q2 2025, with improved operating margin and a significant one-time gain in non-operating items Gross Profit Analysis Gross margin was 58.6% in Q2 2025, a minor decrease of 0.2 percentage points from Q1 2025, primarily due to unfavorable foreign exchange rates and overseas fab dilution - Gross margin decreased by 0.2 percentage points sequentially to 58.6%, mainly due to unfavorable foreign exchange rates and margin dilution from overseas fabs[49] Operating Income Analysis Total operating expenses decreased to NT$84.51 billion, representing 9.1% of net revenue, leading to an improved operating margin of 49.6% - Operating margin improved by 1.1 percentage points to 49.6%, as total operating expenses as a percentage of net revenue decreased from 10.2% in Q1 to 9.1% in Q2[51] Non-Operating Items Non-operating items resulted in a gain of NT$29.61 billion, mainly driven by a one-time US$10 billion capital injection into TSMC Global - The increase in non-operating income was mainly due to a one-time capital injection of US$10 billion to TSMC Global, which reduced USD exposure during NTD appreciation[52] Net Profit and EPS Net income attributable to shareholders rose 10.2% sequentially to NT$398.27 billion, with an increased effective tax rate of 19.4% - The effective tax rate rose to 19.4% in Q2 2025, mainly reflecting the tax on undistributed retained earnings[54] Financial Condition Review The company's financial condition remains robust, with stable liquidity, improved operational efficiency, and increased net cash reserves Liquidity Analysis Net working capital was NT$1,887.61 billion, and the current ratio remained stable at 2.4x, despite a slight decrease in total current assets - Net working capital was NT$1,887.61 billion and the current ratio was 2.4x in Q2 2025[57] Receivable/Inventory Days Operational efficiency improved as days of receivable decreased by 5 days to 23 days, and days of inventory decreased by 7 days to 76 days - Days of receivable decreased by 5 days to 23, and days of inventory decreased by 7 days to 76, mainly due to higher N3 and N5 wafer shipments[59] Debt Service Net cash reserves increased by NT$2.21 billion to NT$1,656.54 billion, primarily due to a decrease in interest-bearing debts from foreign exchange rate changes - Interest-bearing debts decreased by NT$70.87 billion, mainly due to changes in foreign exchange rates[61] Cash Flow Analysis In Q2, net cash from operations was NT$497.07 billion, impacted by a significant income tax payment, leading to a sequential decrease in free cash flow Quarterly Cash Flow Summary Net cash from operations was NT$497.07 billion, with main uses in capital expenditures and dividend payments, resulting in a decrease in the cash position - Net cash from operating activities was NT$497.07 billion. The main uses of cash were capital expenditures (NT$297.22B) and dividend payments (NT$116.70B)[62][63] Free Cash Flow Free cash flow for Q2 2025 was NT$199.85 billion, a decrease of NT$94.89 billion from the previous quarter, mainly due to a large income tax payment - Free cash flow decreased by NT$94.89 billion to NT$199.85 billion in Q2 2025, mainly due to a large income tax payment[65] Capital Expenditures (CapEx) On a consolidated basis, TSMC's capital expenditures totaled US$9.63 billion in the second quarter of 2025 Capital Expenditures (US$ Billions) | Period | Capital Expenditures | | :--- | :--- | | 2Q25 | 9.63 | | 1Q25 | 10.06 | | YTD 2025 | 19.69 | Recent Corporate Developments Key Announcements During the quarter, TSMC announced several key initiatives, including research collaborations, shareholder returns, and sustainability commitments - Technology & Research: Launched "TSMC-UTokyo Lab" for advanced semiconductor research and unveiled the next-generation A14 process technology[21][68] - Shareholder Returns: The Board of Directors approved a NT$5.00 cash dividend for the first quarter of 2025, with distribution scheduled for October 9, 2025[21][68] - ESG Commitment: Committed to an ambitious carbon reduction path in line with the Science Based Targets initiative[21][68] Detailed Consolidated Financial Statements (Unaudited) Consolidated Condensed Balance Sheets The unaudited balance sheet as of June 30, 2025, shows total assets of NT$7,006.35 billion, with total liabilities decreasing and shareholders' equity increasing year-over-year Balance Sheet Summary (NT$ Millions) | Item | June 30, 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Total Assets | 7,006,350 | -1.8% | +17.1% | | Total Liabilities | 2,389,718 | -5.6% | +10.5% | | Total Shareholders' Equity | 4,616,632 | +0.3% | +20.8% | Consolidated Condensed Statements of Comprehensive Income For Q2 2025, net revenue was NT$933.79 billion, with net income attributable to shareholders increasing 60.7% year-over-year Quarterly Income Statement Summary (NT$ Millions) | Item | 2Q 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenue | 933,792 | +11.3% | +38.6% | | Gross Profit | 547,369 | +10.9% | +52.8% | | Income from Operations | 463,423 | +13.8% | +61.7% | | Net Income (Parent) | 398,273 | +10.2% | +60.7% | Six-Month Income Statement Summary (NT$ Millions) | Item | H1 2025 | YoY Change | | :--- | :--- | :--- | | Net Revenue | 1,773,046 | +40.0% | | Gross Profit | 1,040,764 | +54.7% | | Income from Operations | 870,504 | +62.5% | | Net Income (Parent) | 759,837 | +60.5% | Consolidated Condensed Cash Flow Statements For the six months ended June 30, 2025, net cash generated by operating activities was NT$1,122.64 billion, with significant cash used in investing and financing activities Six-Month Cash Flow Summary (NT$ Millions) | Item | H1 2025 | | :--- | :--- | | Net Cash Generated by Operating Activities | 1,122,638 | | Net Cash Used In Investing Activities | (518,681) | | Net Cash Used in Financing Activities | (204,366) | | Net Increase in Cash and Cash Equivalents | 236,897 |