Key Takeaways
- TSMC holds a market share of over 90% in the 3nm and 2nm foundry business, contributing to its overall market share of 60-70%.
- In Q2 2025, TSMC reported record revenues of $30.1 billion, a 44% year-over-year increase, with a total sales of $60.5 billion for the first half of the year.
- TSMC plans to begin high volume manufacturing of 2nm chips in Q4 2025, with trial production already underway, indicating higher yields than anticipated.
Welcome to the second half of a very exciting year in semiconductors. While Intel and Samsung Foundry have made quite a few headlines, TSMC continues to execute flawlessly at 3nm and 2nm. With the TSMC OIP Ecosystem Forums starting later this month let’s take a look at how we got to where we are today.
The TSMC OIP Ecosystem Forum is the second series of events. At the previous TSMC Technology Symposium last April we were told that N2 design starts were exceeding N3 which was quite a statement. From what I have learned from the ecosystem over the last few months, that may have been an understatement. TSMC N2 is absolutely dominating the foundry business and for good reasons, but most importantly it is trust. TSMC’s market share at 3nm and 2nm is upwards of 90% while their total market share is now between 60-70%. Simply amazing but well deserved.
Financially, TSMC has delivered stellar results. In the second quarter of 2025, revenue reached a record $30.1 billion, marking a 44% year-over-year increase. Gross margins climbed to 59%, up 5 percentage points from the previous year, reflecting strong pricing power and efficiency gains from previous nodes. Net profit surged, with earnings per share hitting NT$15.36, beating analyst forecasts. For the first half of the year, total sales hit $60.5 billion, a 40% jump from 2024. Buoyed by this momentum, TSMC raised its full-year 2025 revenue growth guidance to approximately 30%, up from 25%. Personally I believe TSMC is once again being conservative. My guess would be 35% revenue growth but that depends on China business (Nvidia) which seems to be constrained. Either way it will be another great year for TSMC.
My optimism stems from unrelenting AI-related demand with revenue from AI accelerators expected to double in 2025. TSMC capital expenditures for the year are projected at $38 billion to $42 billion, focusing on advanced process technologies and overall capacity expansion.
On the technology front TSMC is still pushing boundaries. The company plans to start high volume manufacturing of its N2 chips in the fourth quarter of 2025 which is earlier than anticipated, meaning yield is higher than anticipated. Trial production at its Kaohsiung and Hsinchu fabs has already begun with Apple, Nvidia, AMD, Qualcomm, and MediaTek leading customer demand. Looking further ahead, TSMC broke ground on a 1.4nm facility in Taiwan, with mass production targeted for the second half of 2028, promising 15% performance gains and 30% power savings. Additionally, advanced packaging capacity (CoWoS) has already doubled to 75,000 WPM six months ahead of schedule through partnerships with ASE and Amkor.
Expansion remains a key strategy amid geopolitical tensions. TSMC’s Arizona subsidiary turned profitable in the first half of 2025, reporting a $150.1 million net profit after initial losses. The company is also advancing fabs in Europe and Japan to strengthen supply chains. In Taiwan, new facilities like Fab 25 in the Central Taiwan Science Park will house 1.4nm and 1nm plants with trial production starting in 2027. A new Taiwanese law ensures cutting-edge tech stays on the island, keeping overseas fabs one generation (N-1) behind. This move addresses U.S.-China trade frictions and potential tariffs, which TSMC has flagged as potential risks.
Despite headwinds like currency fluctuations and rising operational costs, TSMC’s outlook is bullish. Third-quarter revenue is forecasted at $31.8 billion to $33 billion, supported by AI and high-performance computing demand. Monthly revenues through June 2025 showed consistent growth, with June alone up 39.6% year-over-year. Analysts maintain a “Buy” rating, citing sustained AI momentum and even Jensen Huang (Nvidia CEO) has a “Buy” rating on TSMC (“anybody who wants to buy TSMC stock is a very smart person”). Never in the 30+ year history of Nvidia and TSMC have I ever seen Jensen so complimentary of TSMC and that will tell you how closely they are working together.
From 2025 to 2030, TSMC’s investments will reshape sectors like AI, automotive, and consumer electronics, reinforcing its ecosystem for a competitive landscape. As my semiconductor bellwether, TSMC’s trajectory signals a thriving semiconductor industry though vigilance on geopolitics remains essential. Dr. C.C. Wei has proven to be a politically savvy leader so I have no concerns here at this point in time. Go TSMC and GO semiconductor industry, $1 trillion dollars by 2030, absolutely!
Also Read:
TSMC Describes Technology Innovation Beyond A14
TSMC Brings Packaging Center Stage with Silicon
TSMC 2025 Technical Symposium Briefing
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