TSMC(US:TSM) SINOLINK SECURITIES·2025-07-17 15:09Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong expectation for future growth [4]. Core Insights - The company reported Q2 2025 revenue of $30.07 billion, a year-on-year increase of 44.4% and a quarter-on-quarter increase of 17.8%. The gross margin was 58.6%, up 5.4 percentage points year-on-year but down 0.2 percentage points quarter-on-quarter. Net profit reached $12.8 billion, reflecting a year-on-year increase of 60.7% and a quarter-on-quarter increase of 10.2% [2]. - The company has raised its full-year revenue growth guidance to approximately 30%, driven primarily by demand for advanced processes. In Q2 2025, revenue from N3, N5, and N7 processes accounted for 24%, 36%, and 14% of total wafer revenue, respectively, totaling 74% [3]. - The company is expected to benefit significantly from the growing demand for AI chips, with projections for net profits of $49.686 billion, $60.379 billion, and $66.768 billion for the years 2025 to 2027, respectively [4]. Summary by Sections Performance Review - In Q2 2025, the company achieved revenue of $30.07 billion, with a gross margin of 58.6% and net profit of $12.8 billion [2]. Operational Analysis - The decline in gross margin is attributed to the appreciation of the New Taiwan Dollar (TWD), which impacts revenue when converted from USD. A 1% appreciation in TWD results in a 1% revenue loss and a 40 basis points loss in gross margin. In Q2 2025, TWD appreciated by 4.4%, leading to a 180 basis points decline in gross margin, with further expected appreciation causing an additional 260 basis points loss [3]. - The company anticipates the first-generation N2 process to enter mass production in H2 2025, with subsequent processes expected in 2026 and 2028 [3]. Profit Forecast, Valuation, and Rating - The company is positioned as a leader in the wafer foundry industry, with a competitive edge in advanced processes, expected to benefit from the rise in AI chip demand. The projected net profits for 2025, 2026, and 2027 are $49.686 billion, $60.379 billion, and $66.768 billion, respectively [4].