Latest TSM Earnings Report Q1 2025

Company Overview

Taiwan Semiconductor Manufacturing Company Limited (TSMC) is the world's largest dedicated semiconductor foundry, providing a range of integrated circuit manufacturing services. Founded in 1987 by Morris Chang, TSMC pioneered the pure-play foundry business model, focusing solely on manufacturing without designing its own chips. Headquartered in Hsinchu, Taiwan, the company serves a diverse clientele, including major technology firms such as Apple, NVIDIA, and AMD. TSMC's advanced process technologies are integral to high-performance computing, smartphones, automotive electronics, and Internet of Things (IoT) applications. In 2024, the company reported record quarterly revenue of NT$868.5 billion (approximately $26 billion) in the fourth quarter, contributing to an annual revenue of NT$2.9 trillion, a 34% increase from the previous year. This growth is largely driven by the surge in demand for AI-related chips, with AI server and processor revenues expected to triple, accounting for about 15% of TSMC's total revenue. Under the leadership of CEO and Chairman C.C. Wei, TSMC continues to expand its global footprint, with significant investments in new manufacturing facilities in the United States, Japan, and plans for expansion into Germany. As of February 15, 2025, TSMC's stock price is $203.90, reflecting its robust position in the semiconductor industry.

Latest TSM Earnings Comparison (Q1 2025)

Historical TSM Earnings Data

TSM Earnings Call Summary Q1 2025

Highlights

• Solid Financial Results Amid Volatility:

  • Revenue reached $25.5B (-5.1% QoQ, +13% YoY), slightly above guidance despite the January earthquake in Taiwan.

  • EPS: TWD 13.94, Gross Margin: 58.8%, Operating Margin: 48.5%, and ROE: 32.7%.

• AI Drives Growth, Smartphone Softness:

  • HPC (AI & data center) up 7% QoQ, now 59% of revenue.

  • Smartphone down 22% QoQ due to seasonality; IoT down 9%.

• Advanced Nodes Dominance:

  • 3nm contributed 22%, 5nm 36%, and 7nm 15% of wafer revenue.

  • Advanced nodes (7nm and below) accounted for 73% of wafer revenue.

• Strong CoWoS and AI Demand:

  • CoWoS capacity to double in 2025, still fully loaded.

  • AI-related revenue expected to double YoY, with ~45% CAGR through 2029.

• Arizona Expansion Accelerated:

  • Announced $100B new investment, totaling $165B in the U.S. for 6 fabs and 2 advanced packaging facilities.

  • 30% of future 2nm and beyond capacity will be located in Arizona.

• Raised Q2 2025 Guidance:

  • Revenue expected at $28.4B–$29.2B (+13% QoQ); gross margin 57%–59%.

  • FY25 revenue growth reaffirmed at ~mid-20s% YoY in USD.

Risks

1. Overseas Margin Dilution:

   • Overseas fabs (U.S., Japan) expected to dilute gross margin by 2%–3% annually, expanding to 3%–4% by 2029–2030.

2. Tariff & Geopolitical Uncertainty:

   • Potential U.S. tariffs on Taiwan semiconductors remain a risk; no direct visibility on policy outcomes.

3. Natural Disaster Risk:

   • Q1 earthquake in Taiwan disrupted production, though losses were recovered.

4. CapEx Intensity & ROI:

   • $38B–$42B CapEx in 2025 with 70% going to advanced nodes; managing ROI and utilization is key.

5. China Demand & Restrictions:

   • Export controls and potential customer impacts from AI chip bans in China could affect long-term demand.

Opportunities

• AI & HPC Megatrend:

  • AI accelerator revenue expected to double in 2025, supporting structural HPC demand.

  • AI models like DeepSeek and broader AI democratization to further drive silicon consumption.

• 2nm, A16, and Advanced Packaging Leadership:

  • N2 mass production starts H2 2025, with A16 following in H2 2026.

  • Advanced packaging (CoWoS, SoIC) adoption accelerating with broader use in HPC and smartphone chips.

• Global Footprint & Resilience:

  • Arizona: First fab in production, second fab pulled in by several quarters; 30% of future advanced capacity to reside in the U.S.

  • Kumamoto (Japan) and Dresden (Germany) fabs ramping for specialty tech and geopolitical resilience.

• Customer Commitment & Pricing Leverage:

  • Long-term capacity agreements and positive pricing discussions ongoing with key customers (Apple, NVIDIA, AMD).

• Technological Prowess & Ecosystem Control:

  • Strong IP, R&D, and ecosystem partnerships ensure continued technology leadership and client stickiness.

Outlook

• Full-Year 2025:

  • Revenue to grow ~mid-20s% YoY, driven by 3nm/5nm strength, AI acceleration, and full-year N3 ramp.

  • Gross margin to hold above 58% in H1, with full-year guidance closer to ~57% due to overseas dilution.

• CapEx & Expansion Strategy:

  • $38B–$42B CapEx focused on advanced nodes and packaging to support AI, HPC, and smartphone demand.

  • R&D center in Arizona (1,000 engineers) to support fab independence and future scaling.

• CoWoS Demand Remains Strong:

  • Demand to exceed supply in 2025, with better balance expected in 2026.

• Shareholder Return Focus:

  • TSMC remains committed to sustainable and steadily growing dividends; no change to dividend-focused policy.

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.