TSMC Q2 FY2025 Preview: Strong AI Demand Amid Geopolitical Risks

TradingKey - Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM) is set to release its Q2 2025 earnings on Thursday, July 17, 2025, before the Taiwan market opens. The company will hold its earnings conference call and webcast on the same day at 14:00 Taiwan time (2:00 a.m. Eastern Time).

Market Forecast

Where Investors Should Watch

Investors should focus on several critical aspects to fully understand the company’s current performance and future outlook. First, wafer shipment volumes and utilization rates for advanced nodes (3nm and 5nm) will reveal how effectively TSMC is meeting strong AI and smartphone chip demand. The revenue contribution and growth trajectory of High Performance Computing (HPC) clients like Nvidia and AMD are also key, as HPC now represents nearly half of total sales. Investors need to assess the share of revenue from advanced technologies (7nm and below), especially the ramp-up of 3nm and progress toward 2nm production, which indicate TSMC’s technological leadership and growth potential.

Margin trends deserve close attention, particularly how gross margins hold up amid premium wafer pricing, currency appreciation pressures from the stronger New Taiwan dollar, and higher costs associated with overseas fabs in Arizona, Kumamoto, and Dresden. Geopolitical risks remain significant although TSMC has heavy exposure to the U.S. market and limited China revenue, with potential impacts from trade tensions and tariffs. Updates on CoWoS packaging capacity and any strategic partnerships will be important for understanding how TSMC manages these risks.

Q3 guidance will offer insight into demand momentum for AI and smartphones. Capital expenditure levels and allocation toward advanced nodes and global expansion will reveal how aggressively TSMC is investing for future growth. Finally, management’s commentary on customer inventory, wafer pricing power, and supply chain resilience will be crucial for gauging the company’s ability to sustain profitability and navigate ongoing challenges.

Conclusion

TSMC’s Q2 results are likely to reinforce its role as a semiconductor powerhouse benefiting from the AI supercycle. While short-term margin compression and currency effects may cause some volatility, the company’s strong revenue growth, advanced technology adoption, and heavy investment in innovation position it well for sustainable long-term value creation. 

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