Taiwan Semiconductor Manufacturing Company (TSMC) Rockets Past Profit Forecasts: AI Boom Powers 60% Q1 Surge

Updated: April 17, 2025 11:32

Image Source: All-About Industries

Taiwan Semiconductor Manufacturing Company, the world's top contract chipmaker and the backbone of the global tech supply chain, has announced a blockbuster first quarter of 2025. Net profit and capital spending by the company have both jumped above market estimates, driven by strong demand for leading-edge chips, especially those used to drive artificial intelligence and high-end computing. The picture, though, is clouded by geopolitical uncertainty, particularly U.S. President Donald Trump's trade policies.

Q1 2025 Financial Highlights

TSMC posted a net profit of T$361.6 billion for Q1 2025, surpassing the market expectation of T$354.6 billion and a 57% year-on-year improvement.
Net revenue for the quarter was about $25.6 billion, representing a 41.6% increase over last year's comparable period.
Earnings per share (EPS) for Q1 are approximated at $2.10, a major increase from previous year.

Capital Expenditure (Capex)

Q1 2025 capex was $10.06 billion, close to a doubling of Q1 2024's $5.77 billion, indicating aggressive spending in cutting-edge manufacturing capacity.
TSMC's annual capex guidance continues at $38 billion to $42 billion, with most in advanced technologies such as 3nm and 2nm manufacturing.

Business Drivers

Growth was driven by accelerating demand for AI chips and high-performance computing as customers such as Apple and Nvidia increased orders.
March 2025 revenue alone rose 46.5% year-over-year, pointing to consistent momentum in advanced chip orders.

Geopolitical and Market Risks

The outlook for TSMC is overshadowed by U.S. trade policy, including demands for tariffs and increased U.S.-based production, as the administration of President Trump examines Taiwan's leadership in the semiconductor industry.
The company is exposed to export controls and potential penalties on chip shipments to Chinese companies.

Strategic Investments and Global Expansion

TSMC keeps on growing internationally, with significant investments in U.S. manufacturing plants, including a $100 billion pledge made during President Trump.
Even with international expansion, TSMC asserts that the majority of its manufacturing will still be in Taiwan.

Industry Impact

As the lead manufacturer of the world's most advanced chips, TSMC's performance and capital expenditures serve as the benchmark for the whole semiconductor industry.
Investors and market observers are paying close attention to TSMC's guidance for indications of future demand, supply chain health, and the effects of continued geopolitical tensions.

Sources: Reuters, DigiTimes, Moomoo, TSMC March 2025 Revenue Report, AInvest, Korea JoongAng Daily

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