Record-Breaking 61% Surge in TSMC Profits Driven by Soaring Demand for AI Chips
In a notable earnings announcement on Thursday, Taiwan Semiconductor Manufacturing Company (TSMC) reported a significant 61% year-on-year increase in second-quarter profit, surpassing expectations and reaching a record high. The surge was driven by persistent demand for artificial intelligence (AI) chips.
For the upcoming third quarter, TSMC anticipates revenue to range between $31.8 billion and $33.0 billion, representing a 38% year-over-year increase and an 8% uptick from the previous quarter at the midpoint. The CEO of TSMC, C.C. Wei, expressed optimism about the company’s full-year 2025 revenue, projecting a rise of approximately 30% in U.S. dollar terms, bolstered by growth in AI and demand for its most advanced technologies.
TSMC’s high-performance computing (HPC) division, which includes AI and 5G applications, was instrumental in the second quarter’s success, accounting for 60% of revenue. This proportion represents an increase from 52% in the same period last year. TSMC manufactures advanced AI processors for notable clients such as Nvidia and Apple, making it a key player in the AI megatrend.
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 leading edge nodes below 7nm.” Smaller nanometer sizes in semiconductor technology signify more compact transistor designs, resulting in greater processing power and efficiency. Advanced chips, with sizes 7-nanometer or smaller, accounted for 74% of TSMC’s total wafer revenue in the quarter.
Wang further emphasized that “the surging demand from the AI boom is highly sustainable in the near term, with AI still in its infancy and continuing to expand across industries.”
However, potential challenges loom on the horizon for TSMC. The trade policy of U.S. President Donald Trump poses a threat, with Trump previously announcing 32% tariffs on Taiwan and warning of potential additional tariffs on semiconductors. Trade talks between the U.S. and Taiwan are ongoing, as reported by local media outlets.
CEO C.C. Wei acknowledged these uncertainties, stating, “Looking into the second half of 2025, we have not seen any change in our customers’ behavior so far. However, we understand there are potential risks from the impact of tariff policies.”
Other potential challenges for TSMC in the latter half of the year include the appreciation of the Taiwan dollar and potential order cuts from smartphone and PC clients due to global macroeconomic conditions, according to Sravan Kundojjala, an analyst at SemiAnalysis specializing in global foundries.
