TSMC reports record profits as AI boom fuels chip demand; Stock expected to open at all-time high

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has reported record quarterly earnings as global demand for artificial intelligence (AI) chips continues to grow at an unprecedented pace. Analysts expect the company’s share price to surge sharply when markets open, potentially reaching levels never seen before in TSMC’s trading history.

The company posted a 61 percent rise in net profit in the April–June quarter, reaching NT$398.27 billion (£9.7bn; $12.8bn), while revenue grew by 44 percent year-on-year to $30.07 billion (£23.0bn), surpassing analyst expectations.

TSMC’s share price rose more than 6 percent in early Thursday(July 17) trading, reaching $175.29, and is on course to hit an all-time high, buoyed by investor optimism over the AI boom and strong demand from major clients such as Nvidia, Apple, and AMD.


“The primary driver of growth for TSMC has been the robust demand for AI-related chips, particularly for the leading-edge nodes below 7nm,” said Brady Wang, Associate Director at Counterpoint Research.

What’s driving the growth?

TSMC’s results have been fuelled by two main factors: a rapid global build-out of AI infrastructure and a spike in iPhone chip orders ahead of anticipated US tariffs on Taiwanese-made semiconductors.

Advanced chips manufactured on 3nm, 5nm, and 7nm process nodes made up 74 percent of the company's revenue, a reflection of growing demand for more powerful, energy-efficient processors. These chips are essential for AI systems, data centres, and high-end smartphones.

High-performance computing (HPC), which includes AI and server chips, contributed 60 percent of TSMC’s total revenue, a sharp increase from 52 percent a year earlier. At the same time, the 3nm segment, used in the latest iPhones, climbed to 24 percent of total revenue, marking a notable shift toward premium chips.

Despite the AI-led surge, smartphone-related revenue declined slightly to 27 percent, suggesting subdued consumer demand outside of flagship devices like the iPhone.

TSMC has raised its full-year revenue growth forecast to 30 percent, up from a previous range of 20–30 percent. It also expects third-quarter revenue to be between $31.8 billion and $33.0 billion, which would represent 38 percent growth year-on-year.

Concerns remain in place

However, executives warned of potential challenges later in the year. CEO C.C. Wei noted that while current demand remains strong, “uncertainties remain in the second half, particularly around trade policy and customer inventory levels.”

There are growing concerns that demand may begin to level off in the final quarter of the year, following months of intense chip stockpiling by major technology companies. A possible saturation of AI-related purchases and broader macroeconomic pressures could dampen growth.

The Trump factor

TSMC’s strong performance comes amid rising geopolitical tension. Earlier this year, US President Donald Trump announced 32 percent tariffs on Taiwanese semiconductors, citing national security concerns and the need to rebalance global trade. Additional tariffs on electronics and advanced components are also under discussion.

This has led to front-loaded ordering behaviour, with companies rushing to place chip orders before tariffs take effect. In response, TSMC is accelerating the construction of its second fabrication facility in Arizona.

Meanwhile, US export restrictions on AI chips destined for China remain in place. However, recent diplomatic signals indicate a modest easing of tensions, with Nvidia and AMD confirming they have received US approvals to resume limited shipments to Chinese partners.

Still, such restrictions remain a key source of uncertainty for TSMC, which serves as the manufacturing backbone for many of the world’s leading chip designers.

With over 35 percent of its annual growth already secured in the first half, TSMC appears well-positioned for another strong quarter.