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Taiwan Semiconductor Manufacturing Company (TSMC) may have just delivered its strongest quarter yet — and artificial intelligence appears to be the primary catalyst.
For the April–June period, TSMC reported a 61% jump in net profit year-on-year, reaching T$398.3 billion ($13.5 billion). That figure came in well above analyst estimates and marked the fifth straight quarter of double-digit earnings growth.
Revenue, too, rose sharply to T$933.8 billion ($31.7 billion), up 38.6% from the same period last year. These results seem to reflect the continued demand for high-performance chips used in AI and data center applications. TSMC’s high-performance computing (HPC) segment, which includes AI and 5G-related chips, reportedly accounted for 60% of total revenue — up from 52% a year ago.
Riding the AI Wave
Much of this momentum appears to stem from the surge in demand for advanced chips made using cutting-edge manufacturing processes. TSMC noted that chips built using 7-nanometer and smaller nodes now make up nearly three-fourths of its wafer revenue. In semiconductor terms, smaller nanometer designs typically translate to higher performance and efficiency — characteristics that are in high demand for AI applications.
TSMC is a key supplier to companies like Nvidia and Apple, both of which are at the forefront of AI and consumer tech. According to C.C. Wei, TSMC’s CEO, the company expects its 2025 revenue to grow by around 30% in U.S. dollar terms, supported by continued strength in AI and advanced manufacturing nodes.
However, Wei also acknowledged that such forecasts could be affected by several evolving macro and policy factors.
But Headwinds May Be Forming
One of the biggest uncertainties comes from U.S. trade policy. Former President Donald Trump, who is currently campaigning for another term, has proposed “reciprocal tariffs” on countries like Taiwan — including a 32% tariff on semiconductor imports. While the impact of these measures remains unclear, TSMC noted it hasn’t yet seen a shift in customer behavior. Still, it flagged these potential tariffs as a risk for the second half of the year.
There may also be exposure to shifting dynamics between the U.S. and China. Export restrictions have already limited TSMC’s and its clients’ business in China. However, recent developments suggest a possible easing of tensions. Nvidia and AMD have reportedly received assurances allowing some level of chip exports to China, though broader uncertainty remains.
Currency movements also pose a challenge. A stronger Taiwan dollar could dampen export competitiveness, pressuring TSMC’s margins. In addition, softening demand for consumer electronics like smartphones and PCs — as flagged by some analysts — may lead to order revisions in the quarters ahead.
Still a Critical Player
Despite these challenges, TSMC continues to play a pivotal role in global semiconductor supply chains. The company recently reaffirmed its long-term capital investment in the U.S., with $100 billion in new commitments on top of its existing $65 billion pledge for three plants in Arizona. One facility is reportedly operational, and the others are under construction.
While TSMC’s shares have surged over 80% in the past year, they’ve remained largely flat in 2025 — possibly reflecting growing investor caution around policy risks and currency fluctuations.
The Road Ahead
TSMC’s near-term growth may remain tied to how the AI adoption cycle unfolds — and how external forces like tariffs and global demand trends evolve. While the company’s fundamentals appear solid, its future trajectory could depend as much on policy decisions and geopolitics as on technological leadership.
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