Taiwan Semiconductor Q2 Earnings and Revenues Surpass Expectations

Taiwan Semiconductor Manufacturing Company Limited TSM reported second-quarter 2025 earnings per share of $2.47 (EPS), which increased 60.7% year over year. TSM’s second-quarter EPS surpassed the Zacks Consensus Estimates by 4.2%.

TSM reported net revenues of $30.07 billion, up 44.4% year over year. TSM’s second-quarter revenues surpassed the Zacks Consensus Estimate by 0.1%.

TSM’s Financials in Detail

TSM’s revenue distribution by platform consists of high-performance computing, smartphone, Internet of Things, automotive, digital consumer electronics and Other segments, which contributed 60%, 27%, 5%, 5%, 1% and 2%, respectively, in the second quarter.

Taiwan Semiconductor Manufacturing Company Ltd. Price, Consensus and EPS Surprise

Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote

Wafer revenues by technology account for 3nm, 5nm, 7nm, 16/20nm, 28nm, 40/45nm, 65nm, 90nm, 0.11/0.13um, 0.15/0.18um and 0.25um and above products. In the second quarter, the largest contribution to wafer revenues was from 5nm technology, accounting for 36% of the total.

This was followed by 3nm at 24% and 7nm at 14%. The 16/20nm and 28nm nodes each contributed 7%, while 40/45nm and 0.15/0.18um technologies both made up 3% of the revenues. Contributions from 65nm and 0.11/0.13um technologies were 3% and 2%, respectively. The 90nm node accounted for 1% and revenues from 0.25um and above were negligible at 0%.

Geographically, North America was the dominant contributor to net revenues, accounting for a substantial 75% of the total. China and the broader Asia Pacific region each contributed 9%, while Japan generated 4% of the revenues. The EMEA region (Europe, the Middle East and Africa) had the smallest share, contributing just 3%.

TSM’s gross margin was 58.6%, which expanded 540 basis points (bps) from the year-ago quarter. TSM’s operating margin of 49.6% expanded 710 bps year over year. TSM’s net profit margin was 42.7%, which expanded 590 basis points.

Balance Sheet & Cash Flow of TSM

As of June 30, 2025, cash, cash equivalent balances and investments in Marketable Financial Instruments were $90.36 billion, down from $81.4 billion as of March 31, 2025.

Inventories were $10.43 billion in the second quarter compared with $8.84 billion in first-quarter 2025. Accounts receivable increased to $8.08 billion from $7.35 billion in the previous quarter.

The long-term debt was $34.73 billion at the end of the quarter, which changed marginally from the previous quarter’s $34.08 billion. TSM posted a free cash flow of NT$199.85 billion.

Guidance

For the third quarter of 2025, TSM stated that it expects revenues to range between US$31.8 billion and US$33.0 billion, based on its current business outlook.

The company also noted that, assuming an exchange rate of one U.S. dollar to 29.0 New Taiwan dollars, it anticipates a gross profit margin between 55.5% and 57.5% and an operating profit margin in the range of 45.5-47.5%. For the entirety of 2025, TSM expects revenues to increase approximately 30% in U.S. dollars.

Zacks Rank and Stocks to Consider

Currently, TSM carries a Zacks Rank #3 (Hold).

ACI Worldwide ACIW, Adobe ADBE and Advanced Energy Industries AEIS are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. ACIW, ADBE and AEIS carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ACIW shares have lost 14.8% year to date. The Zacks Consensus Estimate for ACIW’s full-year 2025 earnings is pegged at $2.84 per share, up by a penny over the past seven days, implying growth of 7.58% from the year-ago quarter’s reported figure.

ADBE shares have lost 18.7% year to date. The Zacks Consensus Estimate for ADBE’s full-year fiscal 2025 earnings has been revised upward to $20.63 per share in the past 30 days, indicating year-over-year growth of 12%.

AEIS shares have gained 20.5% year to date. The Zacks Consensus Estimate for AEIS’ full-year 2025 earnings is pegged at $5.16 per share, implying a rise of 39% from the year-ago quarter’s level.

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