TSMC(US:TSM)2025-10-17 01:46TSMC (2330.TW) Earnings Call Summary Company Overview - Company: Taiwan Semiconductor Manufacturing Company (TSMC) - Ticker: 2330.TW - Market Cap: NT$38.5 trillion / $1.3 trillion - Enterprise Value: NT$36.8 trillion / $1.2 trillion - 12-Month Price Target: NT$1,720.00 - Current Price: NT$1,485.00 - Upside Potential: 15.8% Key Highlights from the Earnings Call Industry and Market Dynamics - AI Demand: TSMC's management expressed a significantly more positive outlook on AI demand compared to three months ago, indicating exponential growth in AI token demand every three months. The long-term AI revenue CAGR guidance remains at mid-40%, with potential for upward revision in the future [2][25][27]. - Non-AI Market Recovery: The non-AI segment has shown signs of recovery after bottoming out, contributing to overall revenue growth [22]. Financial Performance - 3Q25 Results: - Revenue: NT$989.92 billion (up 6.0% QoQ, 30.3% YoY) - Gross Profit: NT$588.54 billion (GM: 59.5%) - Operating Income: NT$500.69 billion (OpM: 50.6%) - Net Income: NT$452.30 billion (EPS: NT$17.44, up 13.6% QoQ, 39.0% YoY) [21][40]. - 4Q25 Guidance: Revenue expected to be in the range of US$32.2-33.4 billion, with GM guidance of 59-61% and OpM of 49-51% [39]. Capacity and Technology Developments - Advanced Packaging (CoWoS): TSMC is increasing capacity for CoWoS, expecting a 61% CAGR in capacity and a 54% CAGR in shipments from 2025 to 2027. The annual capacity is projected to reach 1,740k wafers by 2027 [3][31]. - N2 Technology: N2 is on track for volume production in 4Q25, with significant demand expected from smartphones and AI/HPC applications. Projections indicate N2 will account for 9.0% of wafer revenue in 2026, higher than N3's initial ramp-up share [23][24]. Financial Guidance Revisions - Revenue Guidance: TSMC raised its 2025 revenue guidance to mid-30% YoY growth (in USD), up from 30% previously, driven by strong AI demand [4][22]. - Capex Guidance: Slightly increased to US$40-42 billion from US$38-42 billion, with a reduction in GM dilution guidance from overseas fab expansion to 1-2 percentage points [4]. Earnings Revisions - EPS Revisions: EPS estimates for 2025, 2026, and 2027 have been raised by 4.9%, 6.9%, and 8.5% respectively, reflecting stronger 3Q25 results and favorable FX rates [44][45]. Risks and Considerations - Potential Upside in AI Revenue: Management indicated that while the AI revenue CAGR guidance remains unchanged, there is potential for upward revision, with further details expected in early 2026 [25][27]. - Market Conditions: Investors should consider the potential impact of macroeconomic conditions and competition in the semiconductor industry on TSMC's performance [8]. Conclusion TSMC's earnings call highlighted robust growth driven by AI demand, a recovery in non-AI markets, and significant advancements in technology and capacity. The company has raised its revenue and EPS guidance, reflecting a strong outlook for the coming years.