Taiwan Semiconductor Manufacturing Company Q2 Earnings Call: Record Quarterly Profit on AI Demand, Q3 Revenue Outlook Set

Taiwan Semiconductor Manufacturing Company (TSMC) reported a record quarterly profit of $13.5 billion, beating forecasts. The company's Q2 net profit surged 61%. TSMC also raised its Q3 revenue outlook to $31.8-33 billion. The strong earnings were driven by demand for AI chips. However, the company remains wary of tariffs.

Taiwan Semiconductor Manufacturing Company (TSMC) reported a record quarterly profit of $13.5 billion, beating market forecasts. The company's Q2 net profit surged 61%, driven by robust demand for artificial intelligence (AI) chips. TSMC also raised its Q3 revenue outlook to $31.8-33 billion, reflecting the company's confidence in the continued growth of the AI market [1].

The strong earnings were primarily attributed to the increasing demand for advanced AI processors, particularly from leading clients such as Nvidia and Apple. TSMC's advanced nodes, including the 3nm and 5nm process nodes, accounted for a significant portion of its wafer revenue. The 3nm node alone contributed 22% of sales in Q2, driven by strong demand for AI chips like NVIDIA's H100 and AMD's MI355X GPUs [2].

Despite the impressive earnings, TSMC faces significant headwinds from US tariffs and a strong Taiwan dollar, which may impact its outlook. The company's shares have risen 5% this year despite concerns over Trump's trade policies and currency exchange rates [2]. The potential tariffs could raise prices and reduce demand, although TSMC's dominance in leading-edge nodes and customer lock-in may mitigate some of these risks [2].

TSMC's Q2 results reflect the company's continued dominance in the semiconductor market, driven by the increasing demand for AI. The company's advanced nodes are critical to AI and high-performance computing (HPC), with the 3nm node's 15% performance improvement and 30% power efficiency gain over 5nm nodes being essential for training large language models and powering data centers [2].

The upcoming earnings announcement is expected to cause price volatility. TSMC's June dip creates a tactical entry point for investors. The company's structural advantages—technological leadership, unmatched scale, and AI/HPC demand resilience—make it the best proxy for the semiconductor supercycle [2]. Valuation: Trading at a 16.37 forward P/E vs. peers like NVIDIA (72.85), TSMC offers better risk-adjusted returns [2].

TSMC's Q2 surged, while rivals like Samsung and SMIC lag. Samsung's 3nm node yields are 20–30% below TSMC's, and its U.S. fab's delayed 2nm production risks losing AI chip contracts. SMIC, hampered by U.S. sanctions, can't compete in advanced nodes. TSMC's 90%+ market share in nodes below 10nm ensures pricing power and profit margins [2].

While TSMC's Q2 surged, the company remains cautious about the potential impacts of tariffs and the appreciating Taiwan dollar. The upcoming earnings announcement is expected to cause price volatility, but the company's structural advantages make it a buying opportunity for investors seeking exposure to the AI era's most critical infrastructure [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/tsmc-reports-record-q2-profit-beats-market-forecast-ai-chip-demand-2507/