Taiwan Semiconductor Manufacturing Corp (NYSE:TSM) delivered a strong Q1, beating expectations on both revenue and EPS. While total revenue declined sequentially, this was anticipated due to smartphone seasonality and the January earthquake in Taiwan.
Management reiterated broad-based demand, particularly for CoWoS technology used in high-performance computing and AI, where capacity expansions are underway to address the outsized demand. Despite ongoing geopolitical tensions, they noted no change in customer behavior, and therefore made no significant adjustments to guidance or forecasts. The product mix is expected to shift toward advanced nodes in the second half of 2025, supporting their reiterated mid-20s revenue growth outlook. Investment continues in the U.S., with Arizona fabs ramping and expected to account for 30% of 2nm production, though this will contribute to margin compression due to higher overseas costs.
TSMC continues to solidify its leadership in advanced chip manufacturing, with AI demand as a major tailwind. However, it’s important to note that current guidance does not account for potential downside from escalating geopolitical risks—a risk that could materially impact performance if the situation escalates or remains unresolved for an extended period.
For more details, key highlights, and commentary, check out the high-level earnings summary.
