Taiwan Semiconductor Manufacturing Company Limited Earnings Recaps
TSMC shares fell 4.0% after earnings, with the likely pressure coming from expected margin dilution: fourth-quarter gross margin is guided lower, and management said overseas-fab dilution could widen to 3%–4% in the next few years. The near-term revenue outlook is strong, but management also flagged challenged consumer and price-sensitive markets and said it is being prudent in planning for 2027.
Key takeaways
- Third-quarter revenue rose 16.2% sequentially to $46.7 billion, above the high end of guidance; EPS was TWD 29.43.
- Gross margin fell 130 basis points sequentially to 66.4%, primarily due to the initial 2 nm ramp.
- Fourth-quarter revenue is guided to $52.3–$54.3 billion, but gross margin is expected to decline 40 basis points to 66% at the midpoint, reflecting continued 2 nm and overseas-fab dilution.
- Overseas-fab gross-margin dilution is now expected to be closer to 2%; management expects it to widen to 3%–4% in the next few years as more U.S. fabs ramp.
- HPC grew 22% sequentially and represented 68% of third-quarter revenue; DCE declined 12% and represented 1%.
TSMC delivered robust Q1 results with 8.4% sequential revenue growth and raised its full-year outlook, supported by strong demand for advanced process technologies and high capacity utilization.
Key takeaways
- Q1 revenue reached USD 35.9 billion, up 6.4% YoY, with gross margin at 66.2%, driven by cost efficiencies and favorable FX.
- Advanced technologies (7nm and below) comprised 74% of wafer revenue, with a notable 25% contribution from 3nm.
- HPC platforms surged 20% QoQ, now accounting for 61% of revenue, while smartphone sales declined 11%.
- The company projects Q2 revenue of USD 39.0–40.2 billion, with gross margins maintaining around 66.5%, despite ongoing dilution from 2nm ramp-up and overseas fab expansion.
- TSMC emphasizes supply chain resilience and expects no near-term disruptions from geopolitical risks, while preparing for a 2–3% margin dilution from new node ramps in 2026.
TSMC reported a robust 10.1% sequential revenue growth in Q3 2025, driven by strong demand for advanced process technologies, while guidance for Q4 suggests a slight revenue decrease but robust year-over-year growth.
Key takeaways
- Q3 2025 revenue reached $33.1 billion, slightly above guidance, with a gross margin increase to 59.5%.
- Advanced technologies (7nm and below) accounted for 74% of wafer revenue; 3nm technology comprised 23%.
- Cash flow from operations was strong, totaling TWD 427 billion ($14.3 billion), with a cash balance of TWD 2.5 trillion ($90 billion).
- Q4 revenue guidance is projected between $32.2 billion and $33.4 billion, representing a slight sequential decline but a 22% increase year-over-year at the midpoint.
- Capital expenditures for 2025 are expected to range from $40 billion to $42 billion, primarily supporting advanced process technologies amidst strong AI-related demand.