Taiwan Semiconductor Faces Market Turbulence in Q1 2025
Taipei, Wednesday, 23 April 2025.
TSMC’s Q1 2025 financial results reveal significant fluctuations in the semiconductor market, impacting supply chains and European electronics reliant on chip availability.
Strong Financial Performance Despite Market Challenges
TSMC reported impressive first-quarter results on April 17, 2025, with net income rising 60.3% year-over-year to NT$361.56 billion [1]. Revenue reached NT$839.25 billion, marking a 41.6% increase from the previous year [1]. While quarterly revenue showed a slight sequential decrease of 3.4% from Q4 2024, the company maintained robust profitability with a gross margin of 58.8% [1].
Advanced Technology Leadership and AI Momentum
The company’s advanced technologies, comprising 7-nanometer and smaller nodes, accounted for 73% of total wafer revenue [1]. Notably, 3-nanometer technology contributed 22% of wafer revenue, while 5-nanometer processes made up 36% [1]. TSMC’s dominance in the semiconductor industry remains strong, controlling 67% of the global foundry market [6]. High-performance computing, particularly AI-related applications, has emerged as a crucial growth driver, with the company projecting to double its AI accelerator revenue in 2025 [2].
Strategic Expansion and Trade Policy Response
In response to evolving trade dynamics and customer demand, TSMC has announced an additional $100 billion investment in US manufacturing, bringing its total US commitment to $165 billion [2]. This strategic move follows recent trade tensions, including potential tariff threats [4]. The company’s expansion includes plans for two new advanced packaging facilities and an R&D center in Arizona, with approximately 1,000 engineers focusing on manufacturing technology support [2].
Forward Outlook and Market Guidance
Looking ahead to Q2 2025, TSMC projects revenue between US$28.4 billion and US$29.2 billion [1], representing a significant sequential increase. Despite market uncertainties, the company maintains its forecast of mid-20% revenue growth for 2025 [3]. However, CFO Wendell Huang acknowledges potential risks, stating, ‘While we have not seen any changes in our customers’ behavior so far, uncertainties and risks from the potential impact from tariff policies exist’ [1].