Summary of Key Points from TSMC 2Q25 Earnings Call Company Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Industry**: Semiconductors Core Financial Results - **2Q25 Revenue**: NT$933.792 million, representing an increase of 11.3% quarter-over-quarter (QoQ) and 38.6% year-over-year (YoY) [7] - **Operating Expenses (Opex)**: NT$83.946 million, a decrease of 2.7% QoQ and an increase of 17.3% YoY [7] - **Earnings Per Share (EPS)**: NT$15.36, up 10.2% QoQ and 60.7% YoY, exceeding Morgan Stanley's estimate of NT$14.60 [7] - **Gross Margin (GM)**: 58.6%, a slight decrease of 17 basis points (bps) QoQ but an increase of 545 bps YoY [7] - **Operating Margin (OPM)**: 49.6%, up 112 bps QoQ and 708 bps YoY [7] 3Q25 Guidance - **Expected Revenue**: Between US$31.8 billion and US$33.0 billion, indicating an 8% increase at the mid-point QoQ [10] - **Expected EPS**: NT$13.33, a decrease of 13.2% QoQ but an increase of 6.3% YoY [10] - **Gross Margin Guidance**: Expected to be between 55.5% and 57.5% [10] Strategic Insights - **Wafer Pricing**: TSMC is expected to achieve its goal of over 53% gross margin, supported by strong execution and potential wafer price hikes [12][14] - **AI Revenue Growth**: TSMC's AI semiconductor revenue is projected to account for approximately 34% of its revenue by 2027 [22] - **Chip Production**: TSMC is expected to produce 5.1 million chips in 2025, with full-year GB200 NVL72 shipments expected to reach 30,000 [24] Market Dynamics - **Demand for Advanced Nodes**: There is strong demand for TSMC's 2nm and 3nm nodes, driven by smartphone and high-performance computing (HPC) applications [27][29] - **China's AI Semiconductor Demand**: The demand for AI semiconductors in China is expected to grow significantly, with the total addressable market (TAM) for cloud AI projected to reach US$48 billion by 2027 [44] Risks and Considerations - **FX Impact**: The potential foreign exchange impact on TSMC's financials could be offset by strong operational execution and pricing strategies [12] - **Geopolitical Risks**: Ongoing geopolitical tensions and US restrictions on China may pose risks to TSMC's operations and market access [84] Conclusion - TSMC's strong financial performance in 2Q25 and optimistic guidance for 3Q25 reflect robust demand in the semiconductor market, particularly in AI and advanced technology nodes. The company is well-positioned to capitalize on growth opportunities while navigating potential risks associated with geopolitical factors and market dynamics.

US-China Trade Relations & Export Controls - Nvidia's H20 chip may resume sales to China, signaling a potential easing of trade tensions between the US and China [2][5] - The US may be seeking faster export licensing for rare earth minerals and magnets from China, while China desires relaxed export controls on advanced chips [7] - The agreement on Nvidia's H20 chip could be a "win-win" situation for both countries, representing a step towards bridging their differences [8] Nvidia's Perspective & Strategy - Nvidia views the potential resumption of H20 chip sales as a victory, with CEO Jensen Huang actively involved in lobbying efforts [2][6] - Nvidia had projected a potential loss of $8 billion in sales this quarter due to export controls [3] - Nvidia has been developing new chips based on Blackwell architecture to comply with US trade restrictions [4] - Jensen Huang has criticized US export controls, arguing they haven't worked and have given competitors like Huawei an advantage [3]