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Taiwan Semiconductor Manufacturing Company (TSMC) plans to fast-track chip production due to strong demand from US customers. The company has reported a record quarterly profit of $13.5 billion, beating forecasts. TSMC has lifted its guidance for the third quarter and expects revenue to increase due to strong demand for AI chips.

Taiwan Semiconductor Manufacturing Company (TSMC) has announced plans to fast-track chip production to meet strong demand from US customers. The company reported a record quarterly profit of $13.5 billion, significantly exceeding forecasts. TSMC has also lifted its guidance for the third quarter, expecting revenue to increase due to robust demand for AI chips.

The second-quarter results, released on July 16, 2025, showed a 38.65% year-over-year increase in net revenue to NT$933.80 billion ($31.7 billion), surpassing estimates. Net income soared 60.7% to NT$398.27 billion ($13.5 billion) [1]. The company's shares were up nearly 6% at 2:25 a.m. ET on trading platform Robinhood.

TSMC, the world's largest contract chip manufacturer, has benefited from the growing trend towards artificial intelligence (AI). The company manufactures advanced AI processors for clients such as Nvidia and Apple. According to Brady Wang, associate director at Counterpoint Research, the primary driver of growth for TSMC has been the robust demand for AI-related chips, particularly for the leading edges nodes below 7nm [1].

The AI semiconductor market is undergoing a seismic shift, driven by the explosive growth of AI. By 2025, the AI semiconductor market is projected to exceed $150 billion, with TSMC leading the charge in advanced chip production for AI and high-performance computing (HPC) [2]. TSMC's strategic reorientation towards AI infrastructure has redefined its revenue composition and growth trajectory.

TSMC's capital expenditure plans underscore its confidence in the AI boom. The company is investing $38–42 billion in 2025 alone, with a $100 billion global expansion strategy targeting advanced manufacturing hubs in Arizona, Japan, and Germany. These investments are critical for scaling production of 3nm and 5nm chips, which are in high demand for AI applications [2].

Despite its pivotal role in the AI ecosystem, TSMC remains undervalued relative to its peers. The company trades at a forward P/E of 22.48x, significantly lower than the sector average of 27.39x. However, analysts argue that this discount reflects TSMC's more stable, capital-intensive business model versus the speculative growth narratives of its customers [2].

TSMC faces potential headwinds from geopolitical tensions, including the trade policy of the US President Donald Trump and export controls that have restricted its business with China. However, amid a thawing of trade relations between Beijing and Washington, TSMC's clients such as Nvidia and AMD have received government assurances allowing them to ship products to China [1].

For investors, the key question is whether TSMC's current valuation offers sufficient upside given its strategic positioning. With a 30% revenue growth forecast for 2025 and a global expansion plan that spans a decade, the company is building a moat around its leadership in AI semiconductors. While the stock may not offer the explosive returns of NVIDIA or AMD, it provides a more stable, capital-efficient path to participating in the AI revolution [2].

References:
[1] https://www.cnbc.com/2025/07/17/tsmcs-second-quarter-profit-soars-nearly-61percent-as-ai-chip-demand-stays-strong-.html
[2] https://www.ainvest.com/news/ai-driven-semiconductor-growth-implications-tsmc-global-tech-demand-2507/