Taiwan Semiconductor Manufacturing Company Limited Q2 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Highlights (Q2 2025)

  • Revenue up 17.8% quarter-over-quarter to USD 30.1 billion, above guidance (11.3% growth in NT terms).
  • Gross margin slightly declined by 0.2 percentage points to 58.6%, primarily due to NT appreciation and overseas fab dilution.
  • Operating margin increased 1.1 percentage points to 49.6% due to operating leverage.
  • EPS TWD 15.36, up 60.7% year-over-year.
  • Return on equity (ROE) at 34.8%.
  • Advanced technologies (7nm and below) accounted for 74% of wafer revenue.
  • End-market revenue mix: HPC 60% (+14%), Smartphone 27% (+7%), IoT 5% (+14%), Automotive 5% (flat), DCE 1% (+30%).
  • Cash and marketable securities: TWD 2.6 trillion (USD 90B).
  • Q2 CapEx: TWD 297 billion (USD 9.6B).

Guidance (Q3 2025)

  • Revenue expected between USD 31.8B and USD 33B, midpoint representing +8% QoQ and +38% YoY.
  • Gross margin: 55.5% to 57.5% (midpoint ~56.5%).
  • Operating margin: 45.5% to 47.5%.
  • 2025 full-year CapEx maintained at USD 38B to USD 42B.

Key Operational Commentary

  • Foreign exchange headwind: NT appreciation cut Q2 revenue by ~4.4% and gross margin by ~180 bps. Q3 expected to see an additional ~6.6% revenue impact and ~260 bps margin drag.

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Jeff Su: [Foreign Language] Good afternoon, everyone, and welcome to TSMC's Second Quarter 2025 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. Today's event is being webcast live through TSMC's website at www.tsmc.com, where you can also download the earnings release materials. If you are joining us through the conference call [Operator Instructions] The format for today's event will be as follows: First, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the second quarter 2025, followed by our guidance for the third quarter 2025. Afterwards, Mr. Huang and TSMC's Chairman and CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then we will open both the floor and the line for the question-and-answer session. As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears on our press release. And now I would like to turn the microphone over to TSMC's CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance. Jen-Chau Huang: Thank you. Good afternoon, everyone. Thank you for joining us today. My presentation will start with financial highlights for the second quarter 2025. After

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