TSMC 2025 Q3 Presentation and Commentary

TSMC held a Q3 2025 press conference today and announced its Q4 2025 outlook. Q4 2025 revenue is expected to be in the range of US$32.2-33.4 billion. This year's annual revenue is expected to increase by "30% mid-range" in US dollar terms.

Highlights of TSMC's Q3 Financial Results

• Single-quarter revenue of about NT$200 million, QoQ +6.0%, YoY +30.3%
• Gross margin 5%, QoQ +0.9, YoY +1.7
• Business Interest Rate 6%, QoQ +1.0, YoY +3.1
• After-tax net income of approximately NT$0.0 billion, QoQ +13.6%, YoY +39.1%
• EPS (Earnings Per Share) : NT$44, QoQ +3.6%, YoY +39.0%

TSMC's 3Q25 EPS of NT$17.44 was better than the market's estimate of NT$16. In US dollar terms, 3Q25 revenue of NT$33.1bn was slightly higher than the company's previous guidance due to strong demand for advanced manufacturing processes.

2025Q3 Process Revenue Share

Shipments of 3nm process accounted for 23%, 5nm for 37%, and 7nm for 14% of the overall sales, while advanced processes (7nm and above) accounted for 74%.

TSMC 2025 Q3 Revenue Share

Source : TSMC

Third Quarter Revenue and Profit

Due to the depreciation of the average exchange rate of NT$ to US$ in the third quarter, TSMC's consolidated revenue was NT$989.92 billion, an increase of 30.3% YoY and 6% QoQ, while net income was NT$452.3 billion, an increase of 39.1% YoY and 13.6% QoQ, and EPS was NT$17.44, an increase of 39% YoY. In US dollar terms, the third quarter revenue was NT$33.1 billion, an increase of 40.8% YoY and 10.1% QoQ. In US dollar terms, Q3 revenue was NT$33.1bn, an increase of 40.8% YoY and 10.1% QoQ, exceeding the high end of the financial forecast. In addition, Q3 gross margin was 59.5%, a new 11-quarter high and the third highest in history, just behind Q4 and Q3 of 2022, while Q3 gross margin was 59.5%, a new 11-quarter high and the third highest in history, just behind Q4 and Q3 of 2022.

2025Fourth Quarter Outlook

TSMC estimates quarterly revenue to be in the range of $32.2~33.4 billion, or $32.8 billion, a decrease of 11 TP3T, and an increase of 221 TP3T compared to the same period last year, according to Jen-Chiu Huang, who said that the outlook for gross margins in the fourth quarter will increase by 50 bps to a mid-teens 601 TP3T, mainly due to more favorable foreign exchange rates, but the impact will be partially offset by diluted margins from overseas foundries. However, this impact will continue to be partially offset by profit dilution from overseas fabs.

Revised full-year revenue

AI demand continues to be strong, TSMC revised the annual dollar revenue increase of 34%-36%, close to the mid-30s percentage, which is the second upward revision this year. And also announced that capital expenditure in 2025 will be raised from the original 38 billion to 42 billion dollars to 40 to 42 billion dollars, of which about 70% will be used in advanced process technology, about 10 to 20% will be used in special process technology, and about 10 to 20% will be used in advanced packaging, testing, photomask production and so on.

Overseas Expansion and Prospects

During the meeting, TSMC noted that it continues to accelerate its capacity expansion in Arizona, U.S.A., where it is currently upgrading to 2nm and more advanced process technologies in response to customer demand. In addition, TSMC noted that it will soon acquire a second large parcel of land near its existing facilities to expand its fab cluster in Arizona to support advanced process customers' demand for smartphone, AI and HPC-related applications.

TSMC emphasized that the company is preparing 2nm fabs in the Hsinchu and Kaohsiung Science Parks with government support. In the coming years, it will continue to invest in advanced manufacturing processes and advanced packaging facilities in Taiwan.

Ji-Pu's point of view.

TSMC's gross profit margin of 59.5% and net profit margin of 50.6% for the quarter exceeded the high end of the financial forecast, with an EPS of NT$17.44, making TSMC a real money-printing machine. The increase in gross profit margin is mainly due to the advanced manufacturing process that no one can surpass, and its revenue share of 74% for 7nm or less (including) is comparable to that of the second quarter, but it is obvious that it has adjusted its pricing strategy. For the third consecutive quarter, the 5nm revenue share exceeded the most advanced mass production point by 3nm, which represents a paradigm shift from Apple's smartphones to AI server chips, and the HPC revenue share of 57% far exceeded that of smartphones by 30%, which means that as long as the infrastructure continues to be built, TSMC's revenue will not be low in the future. We expect AI infrastructure to continue to grow until at least 2026, so next year's revenue will have a chance to grow beyond 30% to $150 bn USD.

TSMC chairman Wei Zhejia also said in the meeting, AI application demand remains strong, and AI-related front and back-end production capacity is still very tight, still very hard to make the gap between supply and demand shrink, the original expected annual compound growth rate of AI revenue of about 44% to 46%, it seems that it will be even more optimistic than previously expected. At the same time, the company also revised its capital expenditure to $42 billion (+5%), with 70% for advanced manufacturing processes, 10~20% for advanced packaging, and 10~20% for special processes, which once again confirms the demand for AI in the coming year and the year after.

Among TSMC's customers, North American customers accounted for about 69%, much higher than Japan's 21%, representing the pressure from the U.S. in the future. Last year, wafer manufacturing, packaging, testing, photomasks and other manufacturing defined as "Wafer Manufacturing 2.0", has been actively expanding production capacity of advanced packaging in Taiwan, early this year also announced that it would be built in Arizona 2 packaging plant. Mr. Wei said at the meeting that TSMC has already cooperated with Amkor to build a packaging plant in the U.S., and construction has already begun in advance. Currently, TSMC's advanced packaging accounts for nearly 10% of its revenue, which is already a certain percentage.