TSMC's Q3 2025 Earnings: A Strong Performance Amid AI Boom
On October 16, 2025, Taiwan Semiconductor Manufacturing Company (TSMC) held its third-quarter earnings conference, showcasing robust financial results driven by surging demand for advanced chips, particularly in AI and high-performance computing (HPC). As the world's leading contract chipmaker, TSMC reported net revenue of US$33.10 billion, exceeding its guidance range of US$31.8-33.0 billion. This marked a 10.1% increase quarter-over-quarter (QoQ) from Q2's US$30.07 billion and a impressive 40.8% year-over-year (YoY) growth from Q3 2024's US$23.50 billion. In New Taiwan Dollars (NT$), revenue reached NT$989.92 billion, up 6.0% QoQ and 30.3% YoY, bolstered by a favorable exchange rate of 29.91 NTD/USD.
Gross margin improved to 59.5%, surpassing the 55.5%-57.5% guidance and rising 0.9 percentage points (ppts) QoQ, thanks to higher capacity utilization and cost efficiencies. Operating margin climbed to 50.6%, up 1.0 ppt QoQ, while net profit attributable to shareholders soared to NT$452.30 billion, a 13.6% QoQ and 39.1% YoY jump. Earnings per share (EPS) hit NT$17.44, reflecting strong profitability. Return on equity (ROE) annualized at 37.8%, up 3.0 ppts QoQ. Wafer shipments grew to 4,085 thousand 12-inch equivalents, up 9.9% QoQ and 22.4% YoY, underscoring operational ramp-up.
Breaking down revenue by technology, advanced nodes dominated, with 3nm processes contributing 37%, 5nm at 23%, and 7nm at 14%. Together, 7nm and below accounted for a significant portion, highlighting TSMC's leadership in cutting-edge semiconductors. Legacy nodes like 28nm (8%) and 16/20nm (7%) provided stability, while older technologies made up the remainder.
By platform, HPC led with 57% of revenue, fueled by AI accelerators and data centers, posting +19% QoQ growth. Smartphones held 30% but remained flat QoQ at -0%, amid seasonal softness. IoT and Automotive segments each at 5% saw strong gains of +20% and +18% QoQ, respectively, driven by edge AI and electric vehicles. Digital Consumer Electronics (DCE) at 1% dipped -8%, and Others at 2% fell -20%.
TSMC's balance sheet remains solid, with total assets at NT$7,354.11 billion, up from Q2. Cash and marketable securities rose to NT$2,751.06 billion (37.4% of assets), while net PP&E stood at NT$3,499.34 billion. Current ratio improved to 2.7x, and asset productivity hit 1.2x. Cash flows were healthy, with operating cash at NT$426.83 billion and free cash flow at NT$139.38 billion, despite NT$287.45 billion in capex for fab expansions.
Looking ahead, CFO Wendell Huang provided Q4 guidance, though details were not specified in the presentation. Chairman & CEO C.C. Wei emphasized TSMC's role in unleashing innovation amid global tech demands. The board approved a NT$5.00 cash dividend for Q2 2025, payable January 8, 2026. With AI momentum persisting, TSMC is poised for continued growth, though it cautioned on forward-looking risks in its Safe Harbor notice.
On October 16, 2025, Taiwan Semiconductor Manufacturing Company (TSMC) held its third-quarter earnings conference, showcasing robust financial results driven by surging demand for advanced chips, particularly in AI and high-performance computing (HPC). As the world's leading contract chipmaker, TSMC reported net revenue of US$33.10 billion, exceeding its guidance range of US$31.8-33.0 billion. This marked a 10.1% increase quarter-over-quarter (QoQ) from Q2's US$30.07 billion and a impressive 40.8% year-over-year (YoY) growth from Q3 2024's US$23.50 billion. In New Taiwan Dollars (NT$), revenue reached NT$989.92 billion, up 6.0% QoQ and 30.3% YoY, bolstered by a favorable exchange rate of 29.91 NTD/USD.
Gross margin improved to 59.5%, surpassing the 55.5%-57.5% guidance and rising 0.9 percentage points (ppts) QoQ, thanks to higher capacity utilization and cost efficiencies. Operating margin climbed to 50.6%, up 1.0 ppt QoQ, while net profit attributable to shareholders soared to NT$452.30 billion, a 13.6% QoQ and 39.1% YoY jump. Earnings per share (EPS) hit NT$17.44, reflecting strong profitability. Return on equity (ROE) annualized at 37.8%, up 3.0 ppts QoQ. Wafer shipments grew to 4,085 thousand 12-inch equivalents, up 9.9% QoQ and 22.4% YoY, underscoring operational ramp-up.
Breaking down revenue by technology, advanced nodes dominated, with 3nm processes contributing 37%, 5nm at 23%, and 7nm at 14%. Together, 7nm and below accounted for a significant portion, highlighting TSMC's leadership in cutting-edge semiconductors. Legacy nodes like 28nm (8%) and 16/20nm (7%) provided stability, while older technologies made up the remainder.
By platform, HPC led with 57% of revenue, fueled by AI accelerators and data centers, posting +19% QoQ growth. Smartphones held 30% but remained flat QoQ at -0%, amid seasonal softness. IoT and Automotive segments each at 5% saw strong gains of +20% and +18% QoQ, respectively, driven by edge AI and electric vehicles. Digital Consumer Electronics (DCE) at 1% dipped -8%, and Others at 2% fell -20%.
TSMC's balance sheet remains solid, with total assets at NT$7,354.11 billion, up from Q2. Cash and marketable securities rose to NT$2,751.06 billion (37.4% of assets), while net PP&E stood at NT$3,499.34 billion. Current ratio improved to 2.7x, and asset productivity hit 1.2x. Cash flows were healthy, with operating cash at NT$426.83 billion and free cash flow at NT$139.38 billion, despite NT$287.45 billion in capex for fab expansions.
Looking ahead, CFO Wendell Huang provided Q4 guidance, though details were not specified in the presentation. Chairman & CEO C.C. Wei emphasized TSMC's role in unleashing innovation amid global tech demands. The board approved a NT$5.00 cash dividend for Q2 2025, payable January 8, 2026. With AI momentum persisting, TSMC is poised for continued growth, though it cautioned on forward-looking risks in its Safe Harbor notice.