Core Viewpoint - TSMC's impressive financial performance in Q1 2025 masks underlying issues, including low wafer shipment volumes and a heavy reliance on advanced process nodes and AI semiconductor demand [4][43][44] Group 1: TSMC's Financial Performance - TSMC reported Q1 2025 revenue of $25.53 billion, a 41.6% year-over-year increase, and operating profit of $12.38 billion, up 56.1%, both setting historical records for the first quarter [4] - Since 2023, TSMC's revenue and operating profit have shown a continuous growth trend, with operating profit margins recovering to nearly 50% by Q4 2024 [4][6] - TSMC's market share is projected to reach 68% by 2025, while competitors like Samsung are expected to see their market share decline significantly [6][7] Group 2: Wafer Shipment and Revenue Discrepancy - Despite record revenue, TSMC's wafer shipment volume remains low, with Q1 2025 shipments at 3.26 million wafers, down from a peak of 3.97 million [12][21] - The discrepancy between revenue growth and wafer shipments indicates a potential issue with production capacity and market demand [8][21] Group 3: Factory Utilization Rates - TSMC's factory utilization rates have been declining, with 8-inch wafer fabs dropping from 95% in Q1 2020 to an estimated 69% in Q1 2025, and 12-inch fabs from 94% to 86% [16][18][21] - The overall low utilization rates contrast sharply with the record revenue, suggesting inefficiencies in production [21] Group 4: Technology Node Performance - Sales from the 7nm node have halved since their peak, while 5nm and 3nm nodes are driving revenue growth [27][28] - Traditional nodes like 16nm and 28nm are experiencing sustained declines, indicating a shift in demand towards more advanced technologies [27][28] Group 5: Regional Sales Distribution - The U.S. market accounted for 77% of TSMC's sales in Q1 2025, a significant increase, while other regions remain below 10% [34][35] - This heavy reliance on the U.S. market raises concerns about potential geopolitical risks and trade policies affecting TSMC's operations [35][36] Group 6: Platform Sales Dynamics - The share of smartphone chips in TSMC's revenue has decreased to 28%, while AI semiconductor sales, particularly in high-performance computing (HPC), have surged to 59% [39][41] - The automotive and IoT sectors remain underperforming, which could impact future growth prospects for TSMC [41][42] Group 7: Future Risks - TSMC's current revenue structure is heavily dependent on AI semiconductor demand, particularly from NVIDIA, creating vulnerability to market fluctuations [43][44] - A potential decline in GPU prices could lead to significant revenue drops for TSMC, highlighting the fragility of its growth model [44]