Financial Data and Key Metrics Changes - Second quarter revenue increased 11.3% sequentially, supported by strong demand for three nanometer and five nanometer technologies, with a 17.8% increase in U.S. dollar terms to $30.1 billion, exceeding guidance [7][20] - Gross margin decreased by 0.2 percentage points sequentially to 58.6%, primarily due to unfavorable foreign exchange rates and margin dilution from overseas fabs [7][14] - Operating margin increased by 1.1 percentage points sequentially to 49.6%, with EPS up 60.7% year over year and ROE at 34.8% [8][10] Business Line Data and Key Metrics Changes - Revenue by technology: three nanometer contributed 24% of wafer revenue, five nanometer 36%, and seven nanometer 14%, with advanced technologies (seven nanometer and below) accounting for 74% of wafer revenue [8] - Revenue contribution by platform: HPC increased 14% quarter over quarter to 60%, smartphone increased 7% to 27%, IoT increased 14% to 5%, automotive remained flat at 5%, and DCE increased 30% to 1% [9] Market Data and Key Metrics Changes - The company ended the second quarter with cash and marketable securities of NT$2.6 trillion (approximately $90 billion) [10] - Current liabilities decreased by $1 billion quarter over quarter, mainly due to a decrease in accrued liabilities [10] Company Strategy and Development Direction - The company plans to invest a total of $165 billion in advanced semiconductor manufacturing in the U.S., including six advanced wafer manufacturing fabs in Arizona [24][25] - The expansion will enable TSMC to scale up production faster to support leading-edge customers in smartphone, AI, and HPC applications [26][28] - The company aims to maintain a competitive position through technology leadership, manufacturing excellence, and customer trust [22][23] Management's Comments on Operating Environment and Future Outlook - Management expects strong demand for semiconductor technology, particularly in AI and HPC, with a projected 30% increase in full-year 2025 revenue in U.S. dollar terms [22] - There are uncertainties regarding tariff policies and their impact on consumer-related markets, but overall semiconductor demand remains robust [21] - Management remains cautious about the potential impact of macroeconomic factors on future performance [21][47] Other Important Information - The company anticipates gross margin dilution from overseas fabs to be between 2% to 3% annually in the early stages, widening to 3% to 4% in later stages [15] - The sensitivity of revenue to the NT dollar exchange rate is nearly 100%, with a 1% appreciation reducing reported NT revenue by 1% [17][19] Q&A Session Summary Question: Demand outlook for AI and data center - Management noted that AI demand is getting stronger, and they are working to narrow the supply-demand gap [40][42] Question: Gross margin sustainability - Management expressed confidence in maintaining a gross margin of 53% and higher despite structural headwinds from foreign exchange rates and overseas fab dilution [51][76] Question: AI accelerator growth and market potential - Management indicated that while it is too early to revise growth targets, the potential for increased demand from China is positive [54][80] Question: CapEx guidance and future expansion - Management stated that CapEx is aligned with business opportunities and macro uncertainties, with expectations for potential increases in future years [94][95] Question: Advanced packaging and technology prioritization - Management emphasized the importance of customer demand in developing advanced packaging technologies and maintaining flexibility in technology transfer [103][106]

Financial Data and Key Metrics Changes - In Q2 2025, revenue increased by 11.3% sequentially, supported by strong demand for 3nm and 5nm technologies, with a 17.8% increase in USD terms to $30.1 billion, exceeding guidance [6][12] - Gross margin decreased by 0.2 percentage points to 58.6%, primarily due to unfavorable foreign exchange rates and margin dilution from overseas fabs [6][14] - Operating margin increased by 1.1 percentage points to 49.6%, with EPS up 60.7% year-over-year and ROE at 34.8% [7][12] Business Line Data and Key Metrics Changes - Revenue contribution by technology: 3nm accounted for 24% of wafer revenue, while 5nm and 7nm accounted for 36% and 14% respectively; advanced technologies (7nm and below) made up 74% of wafer revenue [7] - Revenue by platform: HPC increased by 14% quarter-over-quarter to 60% of revenue; smartphone revenue increased by 7% to 27%; IoT increased by 14% to 5%; automotive remained flat at 5%; DCE increased by 30% to 1% [8] Market Data and Key Metrics Changes - The company ended Q2 with cash and marketable securities of NT$2.6 trillion (approximately $90 billion) [9] - Current liabilities decreased by $1 billion quarter-over-quarter, mainly due to a reduction in accrued liabilities [9] - Days of inventory decreased by 7 days to 76 days, attributed to higher shipments of N3 and N5 wafers [10] Company Strategy and Development Direction - TSMC plans to invest $165 billion in advanced semiconductor manufacturing in the U.S., including six advanced wafer manufacturing fabs in Arizona [24][25] - The company aims to maintain its technology leadership and manufacturing excellence while expanding its global footprint, including plans for new fabs in Japan and Europe [28][29][30] - TSMC expects gross margin dilution from overseas fabs to be between 2% to 3% annually in the early stages, widening to 3% to 4% in later stages [14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand for AI and HPC-related products, with expectations for a 30% increase in full-year 2025 revenue in USD terms [21][22] - There are uncertainties regarding tariff policies and their impact on consumer-related markets, but overall semiconductor demand remains robust [21] - Management remains cautious about the future, considering macroeconomic uncertainties while focusing on technology leadership and customer trust [22] Other Important Information - The company generated approximately $497 billion in cash from operations in Q2 and spent NT$297 billion on CapEx [10] - TSMC's capital expenditures for 2025 are expected to remain between $38 billion and $42 billion [12] Q&A Session Summary Question: Demand outlook for data center AI - Management confirmed that demand for AI is stronger than three months ago and is working to narrow the supply-demand gap [37][40] Question: Gross margin sustainability - Management expressed confidence in maintaining a gross margin of 53% or higher despite structural headwinds from FX and overseas fab dilution [46][49] Question: AI accelerator demand and growth - Management noted that while the H20 chip can now ship to China, it is too early to revise long-term growth targets for AI accelerators [50][52] Question: N2 ramp and revenue contribution - Management indicated that N2 profitability is expected to be better than N3, with revenue contributions anticipated to be significant in 2026 [55][82] Question: CapEx guidance and future expansion - Management acknowledged macro uncertainties but indicated that CapEx spending is unlikely to drop significantly in any given year [86][87]

Financial Performance - TSMC's net revenue reached NT$93379 billion, a 113% increase compared to 1Q25 and a 386% increase compared to 2Q24[6] - Net revenue in US dollars was $3007 billion, up 178% from 1Q25 and 444% from 2Q24[6] - Gross margin was 586%, slightly down 02 percentage points from 1Q25 but up 4+5 percentage points from 2Q24[6] - Operating margin was 496%, up 11 percentage points from 1Q25 and 71 percentage points from 2Q24[6] - Net income attributable to shareholders of the parent company was NT$39827 billion, up 102% from 1Q25 and 607% from 2Q24[6] Revenue Breakdown - 5nm technology contributed 36% of revenue[8] - 3nm technology contributed 24% of revenue[8] - 7nm technology contributed 14% of revenue[8] - HPC platform accounted for 60% of revenue[13] - Smartphone platform accounted for 27% of revenue[13] Growth Rate by Platform (QoQ) - HPC platform grew by 30%[15] - Smartphone platform grew by 6%[15] - IoT platform grew by 14%[15] 3Q25 Guidance - Revenue is expected to be between US$318 billion and US$330 billion[21] - Gross profit margin is projected to be between 555% and 575%[21] - Operating profit margin is expected to be between 455% and 475%[21]

Core Insights - Taiwan Semiconductor Manufacturing Company (TSMC) reported a nearly 61% year-on-year increase in second-quarter profit, driven by strong demand for artificial intelligence chips [1] - TSMC's net revenue for the June quarter rose 38.65% year-on-year to NT$933.80 billion ($31.7 billion), surpassing estimates [2][5] - The company is benefiting from the growing trend towards AI, producing advanced processors for major clients like Nvidia and Apple [2] Financial Performance - Second-quarter net profit reached a record high of NT$398.27 billion, exceeding expectations of NT$377.86 billion [5] - TSMC's revenue of NT$933.80 billion also beat the forecast of NT$931.24 billion [5] Market Dynamics - TSMC faces potential challenges from U.S. trade policies, including the threat of steep tariffs on Taiwan announced by President Trump [2][3] - U.S. export controls have limited TSMC's business with China, affecting key clients such as Nvidia and AMD, although recent assurances from the U.S. government may allow these companies to continue shipping products to China [4]

Well, European chipmaker ASML throwing cold water on yesterday's chip stock rally. The company walking back its 2026 growth forecast, citing trade risks and global tensions. Joining me now, Patrick Morehead, more insight strategy founder, CEO, and chief analyst.Patrick, it's good to see you. So, um, you know, ASML, maker of these lithography machines that are basically crucial in the chipm. They're seen usually as sort of a bell weather or an indicator.So what does it tell us that they are seeing this tarif ...

Investment Rating - The report assigns a "Buy" rating to several companies including NVIDIA, AMD, and TSMC, indicating a positive outlook for these firms in the technology sector [33]. Core Insights - The resumption of NVIDIA's H20 GPU sales to China is expected to positively impact the APAC technology supply chain, particularly benefiting companies like Inventec and Wistron [2][4]. - AMD's MI308X license applications for export to China are moving forward, which could lead to a recovery in revenue after significant write-downs [3]. - The overall demand for NVIDIA's RTX GPU series may moderate due to the increased availability of H20 GPUs, suggesting a shift in market dynamics [4][6]. Summary by Sections NVIDIA and AMD Developments - NVIDIA is filing applications to resume sales of the H20 GPU, with government assurances for license approval, and has introduced a compliant RTX PRO GPU [2]. - AMD's license applications for MI308X are under review, with expectations of resuming shipments as approvals are granted, despite prior inventory write-downs of approximately US$800 million [3]. APAC Technology Supply Chain - Inventec is positioned to benefit significantly from the H20 server rack business, with 10% of shipments to China potentially generating over 20% of sales due to higher average selling prices (ASPs) [4]. - Other ODMs like Wistron and Hon Hai are also expected to gain from the H20 export relief, enhancing their revenue prospects [4]. Semiconductor and HBM Market - The relaxation of export controls on NVIDIA's AI GPUs is anticipated to benefit upstream suppliers like TSMC and KYEC, with projections of significant growth in CoWoS demand [8]. - Samsung is expected to be the main beneficiary in the HBM market due to the resumption of H20 sales, with forecasts indicating substantial quarter-over-quarter growth in HBM bit demand [10]. Price Dynamics and Market Trends - The report notes a potential moderation in RTX GPU sales due to cannibalization from H20, with expectations of price adjustments in the secondary market [6]. - The demand for HBM is projected to surge with the resumption of H20 shipments, despite ongoing localization efforts in China [9].

Core Insights - Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is set to report its second-quarter 2025 earnings on July 17, with a strong focus on advanced semiconductor technologies and increasing demand for AI chips across various sectors, indicating potential robust financial results [1] Revenue Projections - TSM projects revenues between $28.4 billion and $29.2 billion for the second quarter, reflecting a year-over-year increase of 38.3% at the midpoint, while the Zacks Consensus Estimate stands at $30.04 billion, suggesting a year-over-year growth of 44.3% [2][10] Demand for Advanced Chips - The rising adoption of AI in cloud services, personal electronics, and data centers has significantly increased the demand for high-performance chips, benefiting TSM as the world's largest contract chipmaker, particularly due to its leadership in advanced chipmaking technologies like the 3-nm and 5-nm nodes [3][10] AI-Focused Product Demand - TSM has experienced strong demand for its AI-focused products, including Chip-on-Wafer-on-Substrate advanced packaging solutions, with demand consistently exceeding supply, highlighting the company's essential role in AI and high-performance computing applications [4] Margin Pressures - Rising operational costs from TSM's global expansion into Arizona, Japan, and Germany are expected to negatively impact gross margins by 2-3% annually over the next three to five years due to higher labor and utility costs and lower initial utilization rates [5] - Additionally, higher energy prices in Taiwan, following a 25% electricity hike in 2024, present further challenges, especially as advanced nodes require more power [6] Earnings Outlook - Despite the challenges, analysts remain optimistic about TSM's bottom-line growth, with the Zacks Consensus Estimate for second-quarter earnings revised upward by 5 cents to $2.37 per share, indicating a year-over-year growth of 60.1% [7]

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is positioned as a leading player in the artificial intelligence (AI) sector, providing significant returns to investors and achieving new all-time highs in stock performance [1][2]. Company Positioning - TSMC operates as a chip foundry, producing chips for various companies involved in the AI race, including major clients like Nvidia, Tesla, Broadcom, and Apple [4]. - The company is not in competition with its customers, as it does not sell its own products, which alleviates concerns regarding intellectual property conflicts [5]. Technological Advancements - TSMC is recognized for being a pioneer in launching cutting-edge technologies, with its 3-nanometer (nm) chip node achieving high production yields [6]. - The company plans to introduce a 2nm node later this year and a 1.6nm node next year, ensuring continuous innovation and client retention [6]. Growth Metrics - TSMC has experienced rapid growth, with a year-to-date revenue increase of 40% year over year, indicating strong expansion despite a competitive market [11]. - The company reported a 26.9% revenue increase in June, following strong results in the preceding months [10]. Market Comparison - TSMC is the ninth-largest company globally and is growing at a rate comparable to Nvidia, which is notable for a company of its size [13]. - Management anticipates a five-year compound annual growth rate (CAGR) approaching 20%, suggesting sustained growth in the future [13]. Investment Sentiment - TSMC is viewed as a top stock for long-term investment, capitalizing on the AI race and maintaining strong sales to both Nvidia and potential competitors [14].

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Core Insights - Vanessa Lee, Vice President of Materials Management at TSMC, has resigned for personal reasons after taking an extended leave, effective July 13, 2025 [1][2] - Cliff Hou, Senior Vice President and Co-Chief Operating Officer, will take over her responsibilities [1] Group 1: Background on Vanessa Lee - Lee joined TSMC in 2022 as Senior Director of Materials Management and was promoted to Vice President in 2024, becoming the youngest person to hold that title in the company's history [3] - Her previous experience includes significant roles at Apple and Alphabet Inc., where she was known for her expertise in global procurement [5][6] Group 2: Impact and Speculation - Lee's departure has led to speculation regarding the reasons behind it, with some attributing it to personal career planning and others suggesting potential internal management issues, though these claims remain unconfirmed [2] - During her tenure, Lee was involved in high-profile events and was recognized for her influence within TSMC, including attending a private dinner with NVIDIA CEO Jensen Huang [4] Group 3: Contributions to TSMC - Lee established a working model to provide demand forecasts to suppliers and improved collaboration efficiency, which was crucial during supply chain disruptions caused by the COVID-19 pandemic [6]