Taiwan Semiconductor Manufacturing Company (TSM) Q2 2025 earnings summary

Executive summary

• Q2 revenue was NT$933.79B, up 11.3% QoQ and 38.6% YoY; US-dollar revenue was $30.07B, up 17.8% QoQ.

• Net income was NT$398.27B, up 10.2% QoQ and 60.7% YoY; diluted EPS was NT$15.36.

• Robust AI and HPC demand supported results; advanced technologies (7nm and below) accounted for 74% of wafer revenue.

Financial highlights

• Gross margin was 58.6%, down 0.2 percentage points QoQ; operating margin rose 1.1 points to 49.6%.

• Q2 gross margin faced ~220 bps of FX headwind versus Q1 and slightly more than 100 bps of overseas-fab ramp dilution; utilization and cost improvements partly offset the pressure.

• Net profit margin was 42.7%; ROE reached 34.8%.

• Free cash flow was NT$199.85B, down from NT$294.74B in Q1, partly due to higher tax payments.

Outlook and guidance

• Q3 revenue guidance is $31.8B–$33.0B; gross margin 55.5%–57.5% and operating margin 45.5%–47.5%.

• FY2025 revenue growth outlook was raised to ~30% in US dollars; the long-term gross-margin outlook remains 53% and higher.

• Q3 gross margin midpoint of 56.5% reflects FX pressure and greater dilution as Arizona and Kumamoto fabs ramp.

• Management is cautious on potential Q4 weakness amid tariffs and macro uncertainty; customer behavior had not changed so far.