TSMC’s Q2 profit surged by 61% beating expectations

TSMC reported a 60.7% jump in net profit for the second quarter of 2025, beating estimates as demand for AI chips pushed revenue and earnings to all-time highs.

The chipmaker posted NT$398.27 billion in profit, ahead of the NT$377.86 billion forecast, and up sharply from a year ago. It also generated NT$933.80 billion in revenue, about $31.7 billion, again higher than the expected NT$931.24 billion.

The company’s net revenue rose 38.65% year-over-year, with Q2 earnings marking a record high, according to Reuters. This comes as demand for high-performance semiconductors, especially for AI workloads, continues to grow. TSMC shares jumped nearly 6% on trading app Robinhood by early Thursday U.S. time.

AI demand lifts outlook despite policy threats

Looking ahead, TSMC now expects Q3 revenue to land between $31.8 billion and $33.0 billion, which would be a 38% increase year-over-year and up about 8% from Q2 if the midpoint holds. CEO C.C. Wei told analysts during the earnings call that the company’s full-year 2025 revenue should rise about 30% in USD terms, thanks to rising AI demand and production at the 3nm and 5nm nodes.

According to the company, chips made on the 7nm process or smaller accounted for 74% of wafer revenue during the quarter. This reflects the growing need for smaller, more powerful, and efficient chips—especially for AI training and inference. Wei didn’t hold back: he said growth is directly coming from AI customers, and it isn’t slowing anytime soon.

“The primary driver of growth for TSMC has been the robust demand for AI-related chips, particularly for the leading-edge nodes below 7nm,” said Brady Wang, associate director at Counterpoint Research. He added, “Surging demand from the AI boom is highly sustainable in the near term, with AI still in its very beginning stages and continues to expand across industries.”

But the road ahead has more than just tailwinds. Trade tensions are back in play. U.S. President Donald Trump has already proposed steep ‘reciprocal tariffs’ on imports from Taiwan. Taiwan currently faces a 32% tariff announced in April, and talks between Taipei and Washington are ongoing, according to local reports. Trump also warned earlier this month that more tariffs on semiconductors might be coming.

On top of that, U.S. export controls continue to hurt TSMC’s business in China, as well as that of Nvidia and AMD, two of its biggest clients. Both firms said recently they received government assurances to continue limited shipments to China, but the regulatory picture remains cloudy.

There’s also the problem of the Taiwan dollar strengthening, which could weigh on profits, and possible order cuts from smartphone and PC companies if the global economy slows down more than expected. Analyst Sravan Kundojjala from SemiAnalysis said these risks could squeeze margins heading into the second half of the year.

Still, even with those risks, TSMC is running hard on AI momentum. It’s locked in as the world’s largest contract chipmaker, and right now, everyone from cloud platforms to consumer device makers wants chips that can handle massive compute. For now, TSMC is supplying most of them.

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