Taiwan Semiconductor Manufacturing Co Ltd (TSM) (Q2 2025) Earnings Call Highlights: Robust ...
Gross Margin: Decreased 0.2 percentage points sequentially to 58.6%.
Operating Margin: Increased 1.1 percentage points sequentially to 49.6%.
Earnings Per Share (EPS): TWD15.36, up 60.7% year over year.
Return on Equity (ROE): 34.8%.
3-nanometer Technology Revenue: Contributed 24% of wafer revenue.
5-nanometer Technology Revenue: Accounted for 36% of wafer revenue.
7-nanometer Technology Revenue: Accounted for 14% of wafer revenue.
Advanced Technologies Revenue: Accounted for 74% of wafer revenue.
HPC Revenue: Increased 14% quarter over quarter, accounting for 60% of total revenue.
Smartphone Revenue: Increased 7%, accounting for 27% of total revenue.
IoT Revenue: Increased 14%, accounting for 5% of total revenue.
Automotive Revenue: Remained flat, accounting for 5% of total revenue.
DCE Revenue: Increased 30%, accounting for 1% of total revenue.
Cash and Marketable Securities: TWD2.6 trillion or USD90 billion.
Accounts Receivable Turnover Days: Decreased by 5 days to 23 days.
Days of Inventory: Decreased by 7 days to 76 days.
Cash from Operations: TWD497 billion.
Capital Expenditures (CapEx): TWD297 billion or USD9.6 billion.
Cash Dividend: TWD117 billion for third quarter '24.
Third Quarter Revenue Guidance: Expected between USD31.8 billion and USD33 billion.
Third Quarter Gross Margin Guidance: Expected between 55.5% and 57.5%.
Third Quarter Operating Margin Guidance: Expected between 45.5% and 47.5%.
2025 Capital Budget: Between USD38 billion and USD42 billion.
Warning! GuruFocus has detected 9 Warning Signs with BOM:534600.
Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Second-quarter revenue increased by 17.8% sequentially in US dollar terms, reaching $30.1 billion, exceeding guidance.
Advanced technologies (7-nanometer and below) accounted for 74% of wafer revenue, showcasing strong demand for cutting-edge processes.
TSMC's AI and HPC-related demand remains robust, contributing significantly to revenue growth.
The company plans to invest $165 billion in advanced semiconductor manufacturing in the US, indicating strong future growth potential.
TSMC's N2 and A16 technologies are on track, with N2 expected to enter volume production in the second half of 2025, promising future revenue streams.
Negative Points
Gross margin decreased by 0.2 percentage points sequentially to 58.6%, impacted by unfavorable foreign exchange rates and overseas fab costs.
The company anticipates continued gross margin dilution from overseas fabs, with a forecasted impact of 2% to 4% annually over the next five years.
Foreign exchange rate fluctuations pose a significant risk, with a 1% appreciation of the NT dollar against the US dollar reducing gross margin by about 40 basis points.
TSMC's fourth-quarter revenue is expected to decline, reflecting a cautious outlook due to potential tariff impacts and macroeconomic uncertainties.
The company faces challenges in narrowing the supply-demand gap for advanced nodes like N3 and N5, indicating potential capacity constraints.
Q & A Highlights
Q: How is TSMC addressing the increasing demand for AI and data center applications, particularly regarding CoWoS capacity? A: C.C. Wei, Chairman and CEO, stated that AI demand is growing stronger, and TSMC is working to narrow the supply-demand gap for CoWoS. The company is focused on increasing capacity to meet this robust demand.
Q: What is TSMC's outlook on the impact of foreign exchange rates on profitability, and how does it plan to manage these effects? A: Wendell Huang, CFO, explained that foreign exchange rates significantly impact profitability. TSMC plans to manage these effects by leveraging other factors such as pricing and operational efficiencies to maintain a gross margin of 53% or higher.
Q: Can you provide insights into the N2 ramp and its expected revenue contribution? A: C.C. Wei mentioned that the N2 ramp profile is similar to N3, but revenue contribution will be higher due to increased demand from both smartphone and HPC customers. The ramp is constrained by capacity, but the pricing for N2 will reflect its value.
Q: How does TSMC plan to address the tight supply for N3 and N5 nodes, and what is the strategy for mature nodes? A: C.C. Wei noted that both N3 and N5 nodes are experiencing high demand and tight supply. TSMC is using its GigaFab cluster to adjust capacity between nodes. For mature nodes, TSMC focuses on specialty technologies like RF and CMOS image sensors to meet customer demand.
Q: What are TSMC's plans for overseas expansion, and how will this affect the company's overall strategy? A: C.C. Wei highlighted that overseas expansion is driven by customer demand and supported by government incentives. The expansion in the US focuses on leading-edge technology, while Japan and Germany focus on specialty technologies. These expansions are not expected to impact each other negatively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 hours ago
- Yahoo
Nvidia Doubles Down With Massive H20 Order
Nvidia (NASDAQ:NVDA) just placed a fresh order for 300,000 H20 AI GPUs from TSMC (TSM) to keep pace with booming China demand. That order adds to an existing 600,000700,000 H20 chip stockpile and pushes China?bound inventory close to 1 million follows April's U.S. lift on H20 exports under the Trump administration, even though formal export licenses from the Commerce Department are still awaiting approval. Warning! GuruFocus has detected 5 Warning Signs with NVDA. The H20 was built specifically for China with pared?down compute versus Nvidia's H100 and Blackwell lines to comply with 2023 restrictions, and now it's become a linchpin in Nvidia's China play. Analysts say the order underscores Nvidia's pricing power and volume leverage in AI's hottest market. With lead times of nine months to restart H20 production, Jensen Huang has doubled down on TSMC capacity to head off domestic Chinese rivals and blunt any hiccups from export rule changes. Nvidia shares popped on the news as investors bet on strong Chinese uptake to drive another leg of growth. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
2 hours ago
- USA Today
Thermon(R) Introduces Poseidon(TM) and Pontus(TM) Liquid Load Banks: Revolutionizing Data Center Commissioning and Validation
AUSTIN, TX / ACCESS Newswire / July 29, 2025 / Thermon Group Holdings, Inc. (NYSE:THR) ('Thermon'), a global leader in thermal management, power distribution, and environmental controls, today announced its universal availability of their new Poseidon™ Liquid Load Bank (for US markets) and Pontus™ Liquid Load Bank (for non-US markets). These advanced systems are designed to accurately simulate real-world thermal and electrical demand, providing mission critical component test validation for data centers and other High Performance Computing (HPC) environments. The new liquid load banks offer a built-for-purpose solution for the rigorous demands of data center commissioning and start up. They serve as essential test validation systems for critical HPC data center infrastructure, like Coolant Distribution Units, Uninterruptible Power Supplies and back-up power generators. Key features and benefits of the Poseidon and Pontus Load Banks include: A built-for-purpose liquid-cooled load bank targeting the data center commissioning and start-up market, including Integrated Systems Testing. Industry-leading performance, sizing, and weight, contributing to the lower total cost of ownership. Engineered for data center testing applications – with integrated modern controls and monitoring in a standardized package for quick delivery. Simple, easy controls and a comprehensive audible alarm system to indicate high temperature, low flow, and low water conditions. Modular design with the ability to connect over 100 units in series to test the increasing IT loads in the industry. Custom designed and optimized by process heating/heat transfer experts, but standardized for quicker lead times and more value, the Poseidon and Pontus Load Banks boast a robust capacity rating up to 600kW within a compact design. Built for rapid deployment, these lightweight systems feature a mobile, space-saving design, allowing for quick and efficient testing in different locations within modular, mobile HPC and other data center environments. Poseidon and Pontus load banks provide real-time oversight of the dynamic thermal performance and electrical demands crucial for a modern data center in the rapidly expanding age of artificial intelligence (AI). 'The launch of the Poseidon and Pontus Liquid Load Banks marks a significant milestone for Thermon – greatly expanding our opportunity within the rapidly growing data center market.' said Bruce Thames, President & CEO of Thermon. 'As data centers evolve to meet the intense demands of AI and HPC, the need for precise, reliable, and efficient validation tools is paramount. Our new liquid load banks deliver unparalleled performance, mobility, and ease of use, reinforcing Thermon's commitment to providing innovative solutions that empower our customers to build and operate the most robust and efficient critical infrastructure.' The new liquid load banks are available globally and are certified to local requirements along with the following applicable standards: UL, CSA, CE, ASME, ANSI, NEMA, PED and NEC, ensuring compliance and reliability across diverse markets. For more information on the Poseidon and Pontus load banks, click here. Through its global network, Thermon provides safe, reliable and mission critical industrial process heating solutions. Thermon specializes in providing complete flow assurance, process heating, temperature maintenance, freeze protection and environmental monitoring solutions. Thermon is headquartered in Austin, Texas. For more information, please visit CONTACT: Michelle Saab, Senior Manager, Global Marketing Phone: +1-512-560-5482 SOURCE: Thermon Group Holdings Inc. View the original press release on ACCESS Newswire
Yahoo
5 hours ago
- Yahoo
Cadence to pay $140m fine for illegal tech exports to China
The US Department of Justice (DOJ) announced that Cadence Design Systems has agreed to plead guilty and pay more than $140m in penalties for exporting semiconductor design tools to a Chinese military university. The company based in San Jose, California, will pay nearly $118m in criminal penalties. This follows its admission of violating export controls by selling electronic design automation (EDA) technology to the National University of Defense Technology (NUDT), which is associated with China's Central Military Commission. National Security Assistant Attorney General John Eisenberg said: 'Cadence has agreed to accept responsibility for unlawfully exporting sensitive semiconductor design tools to a restricted Chinese military university and has implemented a strong export compliance programme to help prevent any further illegal transmission of American technology. 'American ingenuity is one of our Nation's most precious assets, and the National Security Division will vigorously enforce US export control laws to protect the technological advantage we enjoy because of that ingenuity.' NUDT, added to the US Department of Commerce's Entity List in 2015, is believed to have used US-origin components to develop supercomputers for military purposes. From February 2015 to April 2021, Cadence and its subsidiary in China exported EDA tools without obtaining necessary licences, despite knowing NUDT's status on the Entity List. Cadence's court documents reveal employees facilitated exports to NUDT through Central South CAD Center (CSCC), an alias for the Chinese university. The company continued transactions until September 2020 when it ended its relationship with CSCC due to its ties with NUDT. The US Bureau of Industry and Security (BIS) also announced a parallel civil enforcement settlement, with Cadence agreeing to pay over $95m in civil penalties. Further investigation revealed that employees concealed exports' true destination from Cadence's compliance personnel, said the DOJ. The employees also used aliases in communications to avoid detection. Additionally, Cadence transferred contracts from CSCC to Phytium Technology, another entity linked with NUDT. This was before placing Phytium on export hold in March 2021. Following the DOJ and BIS crediting Cadence's payments under the coordinated agreements, the company will pay a total of over $140m in combined net criminal and civil penalties and forfeiture. The resolution awaits approval from a federal judge in the Northern District of California. The Federal Bureau of Investigation and BIS's Office of Export Enforcement conducted investigations into the case. "Cadence to pay $140m fine for illegal tech exports to China" was originally created and published by Verdict, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
