Strong AI chip demand boosts TSMC's Q2 earnings by 60 percent, resulting in a substantial increase.
TSMC, the world's largest contract chip manufacturer, has reported better-than-expected results for the second quarter of 2025, with its sales and profit growth primarily driven by robust demand for AI chips from tech giants like Nvidia, Meta, and Google.
The company's net income for the three months ending 30 June was NT$398.2bn (€11.7bn), a 60.7% increase compared to last year. TSMC's second quarter revenue increased by 38.6% year-over-year, reaching NT$933.7bn (€27.35bn). These impressive figures were attributed to high demand for AI chips from big tech companies.
TSMC's Senior VP and Chief Financial Officer, Wendell Huang, stated that the company expects strong demand for its leading-edge process technologies moving into the third quarter of 2025. TSMC's CEO, C.C. Wei, affirmed that AI orders continue to be "hot" and that strong AI demand is expected to persist in the near term.
Ben Barringer, global technology analyst at Quilter Cheviot, commented that TSMC's margins remained solid despite currency headwinds from a stronger Taiwanese dollar. In fact, TSMC has raised its Q3 sales growth expectations to over 30% year-on-year, up from previous full-year expectations of 25%.
However, the positive outlook is not without challenges. The ongoing tariff policy of the United States is overshadowing TSMC's outlook. TSMC acknowledges some tariff uncertainty which could potentially affect demand, particularly for non-AI chips. To mitigate tariff risks, TSMC has committed $165 billion to build more production capacity in the U.S., aiming to avoid or reduce tariff exposure in the future.
Despite these uncertainties, analysts see TSMC as continuing to benefit from the AI boom while navigating geopolitical challenges, without immediate expected disruption to near-term AI-driven growth. Individual company news, such as ASML's financial outlook, fuel concerns that the market trend for AI-linked companies may be short-lived. However, TSMC's strong results and future outlook suggest a more sustainable growth trajectory in the AI sector.
In summary, TSMC’s sales and profit growth are currently being propelled by robust AI chip demand, and the company maintains a strong future outlook on this basis. However, the risk from Trump-era tariffs introduces some caution, with TSMC strategically expanding U.S.-based production to hedge against this risk, indicating a balanced but confident view towards its AI-driven growth trajectory in 2025 and beyond.
[1] https://www.reuters.com/business/tsmc-posts-record-q2-profit-ai-demand-remains-hot-2025-07-20/ [2] https://www.bloomberg.com/news/articles/2025-07-20/tsmc-raises-q3-sales-growth-expectations-as-ai-demand-remains-strong [3] https://www.cnbc.com/2025/07/20/tsmc-sees-strong-demand-for-ai-chips-despite-tariff-risks.html [4] https://www.wsj.com/articles/tsmc-raises-sales-growth-expectations-as-ai-demand-remains-strong-11658213741
The impressive financial results of TSMC, primarily driven by robust AI chip demand, indicate a growing interest in investing in the data-and-cloud-computing sector enabled by technology. Wendell Huang, TSMC's Senior VP and Chief Financial Officer, predicts strong demand for TSMC's leading-edge technology moving into the third quarter, suggesting potential opportunities for future investing in the company.