DBS economist: Concerns about US reciprocal tariffs on Taiwan economy have eased since April

DBS economist: Concerns about US reciprocal tariffs on Taiwan economy have eased since April

Taiwan Semiconductor Manufacturing (TSMC) reported robust second-quarter (Q2) results, indicating a strong demand for AI chips. The company's net revenue surged 38.65% year-over-year to NT$933.80 billion, surpassing estimates [1]. This growth was driven by the high-performance computing (HPC) division, which contributed 60% of the revenue, up from 52% in the same period last year [1]. Advanced chips, with sizes 7 nanometers (nm) or smaller, accounted for 74% of TSMC's total wafer revenue in the quarter [1].

TSMC's forecast for third-quarter revenue was between $31.8 billion and $33.0 billion, representing a 38% year-over-year increase and an 8% increase from the prior quarter [1]. The company expects its full-year 2025 revenue to rise by around 30% in U.S. dollar terms, supported by growth in AI and demand for its most advanced technologies [1].

TSMC's shares were up over 4% at 4:30 a.m. ET on trading platform Robinhood, reflecting investor confidence in the company's performance and outlook [1]. The stock also gained over 20% year-to-date and 57% in the last three months [2].

The strong Q2 results from TSMC suggest that the AI revolution is sustainable, which could bolster Nvidia's prospects. While concerns about AI growth prospects and sales in China have led Nvidia investors to take a more measured approach, TSMC's results indicate that the demand for AI chips remains robust [3]. This could bolster Nvidia's prospects, as the company is a key supplier of graphics processing units (GPUs) to TSMC.

However, there are potential headwinds for TSMC, including the Trump administration's trade policies and tariffs on Taiwan. TSMC's Chairman, C.C. Wei, acknowledged these uncertainties but noted that the company had yet to see any changes in customer behavior so far [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.benzinga.com/markets/earnings/25/07/46462634/nvidia-supplier-taiwan-semiconductor-on-a-roll-profit-explodes-with-strong-margin-growth
[3] https://cryptorank.io/news/feed/d1f81-taiwan-semiconductor-raises-2025-outlook-tsmc-stock-pops