The AI spending boom continues, Taiwan Semiconductor's Q2 revenue grows by 39%
In the second quarter, Taiwan Semiconductor's revenue grew by 39%, reaching NT$ 934 billion, exceeding market expectations and reflecting the ongoing trend of increasing spending on artificial intelligence. Investor interest in AI-related companies has rebounded, especially against the backdrop of strong demand from major chip design companies like NVIDIA. Taiwan Semiconductor expects sales to grow by 20% in 2025 and plans to reinvest $100 billion to expand manufacturing capacity. Despite facing challenges from a weakening dollar, Taiwan Semiconductor's operating profit margin is still expected to remain around 47%
According to Zhitong Finance APP, Taiwan Semiconductor Manufacturing Company (TSMC.US) reported a 39% revenue growth in the second quarter, exceeding market expectations, which has boosted hopes for sustained prosperity in artificial intelligence (AI) spending following the ChatGPT boom. Data shows that the manufacturer, which produces chips for Nvidia and Apple, saw its revenue rise to NT$934 billion (approximately USD 32 billion) in the past three months, surpassing analysts' average expectation of about NT$928 billion.
Investors have been flocking back to AI-related companies, shaking off previous concerns raised by China's DeepSeek. DeepSeek's low-cost AI model had once led investors to question the massive investments made by Meta and Google in data centers. This week, Nvidia became the first company in history to reach a valuation of USD 4 trillion, highlighting renewed investor enthusiasm for companies like TSMC that play a key role in AI infrastructure development.
TSMC CEO C.C. Wei assured shareholders in June this year that the demand for AI chips still exceeds supply and reiterated the outlook for a roughly 20% increase in sales in dollar terms by 2025. TSMC has committed to reinvesting USD 100 billion to expand its manufacturing capacity in Arizona and to increase its capacity in Japan, Germany, and Taiwan.
Bloomberg Intelligence analyst Charles Shum stated, "Thanks to strong demand for AI from major chip design companies like Nvidia and Intel's growing outsourcing orders, TSMC's sales in the second quarter are likely to have reached the upper limit of its guidance range of USD 29.2 billion. This strong growth momentum is expected to offset weakness in the mobile and consumer sectors, allowing the company to achieve its goal of 25% annual dollar sales growth. However, due to the impact of a weaker dollar, we expect its operating profit margin to be close to the lower limit of the guidance range of 47%."
As the world's largest chip foundry, TSMC is at the core of the global technology supply chain, producing cutting-edge chips for Apple smartphones and Nvidia's AI products.
Despite Nvidia driving its growth, TSMC's business still largely depends on Apple and smartphone manufacturers.
For 2025, investors remain cautious about the impact of tariffs on the global economy and the electronics industry.
The trade war initiated by the Trump administration has prompted economists to lower their forecasts for global economic growth, raising doubts about prospects across various sectors from iPhone demand to computing
