TSMC posts record quarterly profit on AI demand, but cautious on tariff impact
Saying demand for AI was getting stronger and stronger, TSMC predicted another leap in sales for the third quarter and hiked its revenue outlook for the full year.
It also noted that key client Nvidia had recently been allowed by the US government to resume sales to China of its H20 AI chip.
'China is a big market, and my customer can continue to supply the chip to the big market, and it's very positive news for them and in return it's very positive news for TSMC,' chief executive CC Wei told a press conference.
But momentum for Q4 earnings could be different. 'We are taking into consideration the possible impact of tariffs and a lot of other uncertainties, so we are becoming more conservative,' Wei noted, though he added that TSMC had yet to see any changes in customer behaviour so far.
In the April-June quarter, net profit hit a historic high of NT$398.3 billion (S$17.4 billion), up 60.7 per cent year-on-year and marking its fifth straight quarter of double-digit growth. That was well ahead of a NT$377.9 billion LSEG SmartEstimate.
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For the current quarter, it predicted a leap in revenue of up to 40 per cent and for the full year, it now estimates revenue growth of around 30 per cent in US dollar terms, up from a previous forecast of 'close to the mid-20s'.
But while sales are roaring, TSMC said the New Taiwan dollar's appreciation against the US dollar – around 12 per cent so far this year – would dent margins.
Its Q3 gross margin is expected to fall to between 55.5 per cent and 57.5 per cent, down from 58.6 per cent in the second quarter, also hurt by TSMC's ramp-up of investment in new US and Japanese factories.
However, the company stuck to its capital expenditure plan for the year of US$38 billion to US$42 billion, and chief financial officer Wendell Huang said that it was very unlikely that such spending would suddenly drop going forward.
TSMC announced plans for a US$100 billion US investment with US President Donald Trump at the White House in March, on top of US$65 billion pledged for three plants in the state of Arizona, one of which is up and running.
But Trump has said semiconductor-specific tariffs could come soon. Taiwan was also threatened with a 32 per cent reciprocal tariff rate in April, although it has yet to be notified of an updated figure that some countries have received.
Taiwan-listed shares in TSMC surged some 80 per cent last year but have climbed just 5 per cent for the year to date on worries about tariffs and unfavourable currency exchange rates. REUTERS
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Straits Times
8 minutes ago
- Straits Times
EU, Japan to work more closely to address unfair trade, EU's von der Leyen says
Find out what's new on ST website and app. European Commission President Ursula von der Leyen, European Council President Antonio Costa and Japanese Prime Minister Ishiba Shigeru attend a meeting at Prime Minister Office, in Tokyo, Japan, July 23, 2025. David Mareuil/Pool via REUTERS TOKYO - The European Union and Japan will work more closely to counter economic coercion and address unfair trade practices, European Commission President Ursula von der Leyen told reporters on Wednesday. Von der Leyen's comments came after an EU-Japan summit with Japanese Prime Minister Shigeru Ishiba as the EU struggles to conclude a trade deal with the United States and a day before potentially tough meetings with Chinese leaders. Japan struck a trade deal with the United States on Tuesday that lowered tariffs on auto imports in exchange for U.S.-bound investment and loans. Von der Leyen said the EU and Japan would seek to strengthen economic security. "We will also work more closely together to counter economic coercion and to address unfair trade practices," she said, adding later: "We believe in global competitiveness and it should benefit everyone." Ishiba told reporters that the EU and Japan would work to maintain and strengthen a rules-based, free and fair economic order. Ishiba added that the EU and Japan had agreed to work to strengthen the defence industry and to start talks for an information security agreement. Top stories Swipe. Select. Stay informed. Singapore Singapore's domestic recycling rate drops to all-time low of 11% Singapore Sota parent portal taken down for urgent patching following global cyberattack alerts Singapore HDB launches 10,209 BTO and balance flats, as priority scheme for singles kicks in Singapore Five teens arrested for threatening boy with knife, 2 charged with causing hurt Singapore Local buyers are key to recovery of prime district condo market Singapore Ex-Tanjong Pagar United footballer charged with assault after Singapore Premier League match in Feb Singapore COE prices for cars mostly unchanged; premium for commercial vehicles up 2.9% Singapore Cyclist charged after allegedly hitting elderly pedestrian, killing him "In the field of security, we agreed to cooperate to launch a defense industry dialogue to strengthen the defense industrial base, which is a priority for both sides, and to begin official negotiations on a Japan-EU information security agreement," Ishiba said. REUTERS


CNA
8 minutes ago
- CNA
As the US cuts trade deals across Asia, how is China feeling the heat?
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For example, in the case of the US-Vietnam agreement, goods identified as transshipped face a 40 per cent tariff, double the 20 per cent baseline rate, signalling Washington's intent to clamp down on workaround routes that have long benefited Chinese exporters. Such provisions threaten to shut off a critical pressure valve in China's trade strategy, raising costs for exporters and potentially diverting orders to rival manufacturing hubs that now enjoy more favourable terms. This would also pile further economic stress on the Chinese economy, which is already contending with sluggish domestic demand, weak private investment and mounting demographic headwinds, including an ageing population and a shrinking workforce. 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European Council President Antonio Costa and European Commission President Ursula von der Leyen will be attending the summit in Beijing, and are set to meet with Chinese President Xi Jinping and Chinese Premier Li Qiang. Analysts have signalled low expectations for any breakthrough as trade frictions persist, and Europe remains wary of Beijing's support for Russia's war in Ukraine, as well as its broader challenges to international law and global institutions. While the expectation of any immediate deal is low, China may be more flexible in addressing a wider range of issues and positioning itself as a 'free trade enabler', Gary Ng, senior economist at Natixis and research fellow at the Central European Institute of Asian Studies, told CNA. 'It can be the removal of certain sanctions or commitment to market access, or easing some anti-dumping duties,' he said. 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Straits Times
38 minutes ago
- Straits Times
EU, Japan to work more closely to address unfair trade, says EU's von der Leyen says
Find out what's new on ST website and app. European Commission President Ursula von der Leyen, European Council President Antonio Costa and Japanese Prime Minister Ishiba Shigeru attend a meeting at Prime Minister Office, in Tokyo, Japan, July 23, 2025. David Mareuil/Pool via REUTERS The European Union and Japan will work more closely to counter economic coercion and address unfair trade practices, European Commission President Ursula von der Leyen told reporters on Wednesday. Von der Leyen's comments came after an EU-Japan summit with Japanese Prime Minister Shigeru Ishiba as the EU struggles to conclude a trade deal with the United States and a day before potentially tough meetings with Chinese leaders. Von der Leyen said the EU and Japan would seek to strengthen economic security. "We will also work more closely together to counter economic coercion and to address unfair trade practices," she said, adding later: "We believe in global competitiveness and it should benefit everyone." REUTERS