TSMC – Another Outstanding Quarter
TSMC posted excellent second quarter results this morning. Revenues climbed 38.6% year-on-year while the gross profit margin climbed +5.4ppts to 58.8%. The operating margin rose 7.1ppts to 48.5% while the net profit margin climbed 5.9ppts to 43.1%. For the umpteenth time the company has comprehensively beaten expectations.
The High Performance Computing (HPC) platform saw revenues jump 14% quarter-on-quarter and now account for 60% of revenues. The smartphone platform saw revenues climb 7% and now account for 27% of revenues. Not that long ago smartphones were over 50% of total revenues!
The New Taiwanese dollar (TWD) climbed just over 10% against the US dollar in 2Q25. A high percentage of TSMC’s costs are in TWD so this is something of a headwind but third quarter 2025 guidance was positive. Revenues US$31.8-33bn, GPM 55.5%-57.5% and OPM 45.5-47.5%.
Furthermore, the company lifted full year revenue growth guidance from 25% to 30% although management stressed that they are taking a “conservative attitude” in the light of tariff related uncertainties and the stronger TWD.
CEO CC Wei commented that AI demand remains robust, indeed is growing stronger as the roll out of data centres continues.
TSMC is the largest index weighting in the Asia ex Japan region at 11.56%, more than twice the weighting of number two (Tencent at 5.35%) and the only non-US stock in the MSCI ACWI index. Our Asian portfolios have owned the company for over twelve years. We suspect it will still be in the portfolios in 2037.
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