TSMC(US:TSM) ZACKS·2025-10-14 13:36Core Insights - Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is set to report its third-quarter 2025 earnings on October 16, with strong expectations driven by the demand for AI chips and its leadership in advanced semiconductor technologies [1] Revenue Projections - TSM projects third-quarter revenues between $31.8 billion and $33 billion, indicating a year-over-year increase of approximately 38% at the midpoint, while the Zacks Consensus Estimate stands at $31.5 billion, reflecting a 34% year-over-year growth [2][9] AI Demand and Technology Leadership - The increasing adoption of AI across cloud services, consumer devices, and data centers is driving the need for advanced, energy-efficient chips, positioning TSM as a key beneficiary due to its dominance in 3-nanometer (3nm) and 5-nm manufacturing nodes [3] - TSM has seen strong demand for its AI-focused products, particularly Chip-on-Wafer-on-Substrate advanced packaging solutions, which have consistently exceeded supply [4] Margin Challenges - Despite solid revenue momentum, rising operational costs from global expansion and increased energy prices are expected to pressure TSM's gross margins, with a projected reduction of 2-3% annually over the next few years due to new fabs in Arizona, Japan, and Germany [5][6] - A 25% electricity price hike in Taiwan in 2024 adds to the challenges, particularly as advanced nodes require more power [6] Earnings Outlook - The Zacks Consensus Estimate for TSM's third-quarter earnings has been revised upward to $2.59 per share, indicating a year-over-year growth of 33.5% [6]