TSMC Earnings: AI Drives Demand

Core Insights - TSMC's fiscal 2025 second-quarter financial report shows a significant revenue increase driven by strong demand for advanced semiconductor chips, despite missing revenue expectations due to currency fluctuations [2][3]. Financial Performance - Net revenue for Q2 2025 reached $30.1 billion, a 44% increase from $20.8 billion in Q2 2024, although it missed analyst expectations [2][3]. - Earnings per share rose by 67% from $1.48 to $2.47, exceeding expectations [2]. - Gross margin improved to 58.6%, up 5.4 percentage points year-over-year [2][5]. - Wafer shipments increased by 19%, from 3,125 thousand 12-inch equivalent wafers to 3,718 thousand [2]. Demand and Market Trends - TSMC reported strong demand for its leading nodes, with 3nm nodes contributing 24% and 5nm nodes 36% to total revenue [3]. - High-performance computing (HPC), including AI-related chips, accounted for 60% of revenue, up from 52% in the same quarter last year, with a 14% increase from Q1 2025 [4]. Profitability Metrics - The company's operating margin rose to 49.6%, an increase of over 7 percentage points, while the net profit margin reached 42.7%, up nearly 6 percentage points [5]. - Capital expenditures for Q2 totaled $9.63 billion, bringing the year-to-date total to $19.69 billion [5]. Future Outlook - For Q3 2025, TSMC anticipates revenue between $31.8 billion and $33 billion, with a gross margin forecast of 55.5% to 57.5% and an operating margin of 45.5% to 47.5% [6]. Market Reaction - Following the report, TSMC's shares rose approximately 4%, reflecting strong revenue and earnings growth driven by AI chip demand [7]. Competitive Position - TSMC maintains a dominant position in the leading-node foundry market, crucial for AI chip designers like Nvidia and AMD, with increasing investments in AI infrastructure expected to sustain demand for its advanced nodes [8].