TSMC Shatters Expectations with Staggering 61% Q2 Profit Surge
TSMC just flexed its silicon muscle—posting a 61% profit explosion that left analysts scrambling to upgrade their spreadsheets.
The chip titan’s Q2 performance didn’t just beat expectations—it vaporized them. While Wall Street was busy predicting linear growth, TSMC delivered a masterclass in semiconductor dominance.
Behind the numbers: A perfect storm of AI demand, pricing power, and competitors tripping over their own supply chains. Meanwhile, traditional investors are still trying to pronounce 'N3E process node.'
Cynical take: If this keeps up, TSMC’s earnings calls might replace Fed meetings as the market’s new obsession.
AI demand lifts outlook despite policy threats
Looking ahead, TSMC now expects Q3 revenue to land between $31.8 billion and $33.0 billion, which WOULD be a 38% increase year-over-year and up about 8% from Q2 if the midpoint holds. CEO C.C. Wei told analysts during the earnings call that the company’s full-year 2025 revenue should rise about 30% in USD terms, thanks to rising AI demand and production at the 3nm and 5nm nodes.
According to the company, chips made on the 7nm process or smaller accounted for 74% of wafer revenue during the quarter. This reflects the growing need for smaller, more powerful, and efficient chips—especially for AI training and inference. Wei didn’t hold back: he said growth is directly coming from AI customers, and it isn’t slowing anytime soon.
“The primary driver of growth for TSMC has been the robust demand for AI-related chips, particularly for the leading-edge nodes below 7nm,” said Brady Wang, associate director at Counterpoint Research. He added, “Surging demand from the AI boom is highly sustainable in the NEAR term, with AI still in its very beginning stages and continues to expand across industries.”
But the road ahead has more than just tailwinds. Trade tensions are back in play. U.S. President Donald TRUMP has already proposed steep ‘reciprocal tariffs’ on imports from Taiwan. Taiwan currently faces a 32% tariff announced in April, and talks between Taipei and Washington are ongoing, according to local reports. Trump also warned earlier this month that more tariffs on semiconductors might be coming.
On top of that, U.S. export controls continue to hurt TSMC’s business in China, as well as that of Nvidia and AMD, two of its biggest clients. Both firms said recently they received government assurances to continue limited shipments to China, but the regulatory picture remains cloudy.
There’s also the problem of the Taiwan dollar strengthening, which could weigh on profits, and possible order cuts from smartphone and PC companies if the global economy slows down more than expected. Analyst Sravan Kundojjala from SemiAnalysis said these risks could squeeze margins heading into the second half of the year.
Still, even with those risks, TSMC is running hard on AI momentum. It’s locked in as the world’s largest contract chipmaker, and right now, everyone from cloud platforms to consumer device makers wants chips that can handle massive compute. For now, TSMC is supplying most of them.
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