Introduction
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has posted impressive results for the Q1 2025. The company reported consolidated revenue of NT$839.25 billion, a net income of NT$361.56 billion, and a diluted earnings per share (EPS) of NT$13.94 (US$2.12 per ADR unit).
This marks a significant year-over-year increase and highlights TSMC’s continued dominance in the global semiconductor industry.
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Key Highlights for Q1 2025
Revenue Surge: TSMC’s revenue for Q1 2025 reached NT$839.25 billion, reflecting a 41.6% increase compared to the same period last year.
Net Income Growth: The company saw its net income rise by 60.3%, reaching NT$361.56 billion.
Earnings Per Share: Diluted EPS increased by 60.4%, hitting NT$13.94.
Gross Margin and Profit Margins: Gross margin stood at 58.8%, operating margin was 48.5%, and net profit margin was 43.1%.
Advanced Technology Growth: Shipments of advanced process nodes, including 3-nanometer (nm), 5-nanometer, and 7-nanometer wafers, accounted for a significant portion of total wafer revenue.
Year-over-Year Performance
TSMC’s first-quarter results showed remarkable growth on a year-over-year basis. Revenue increased by 41.6% compared to Q1 2024.
Net income surged by 60.3%, while diluted EPS grew by 60.4%. This solid performance underscores the company’s strong position in the semiconductor market, particularly as demand for advanced chip technologies continues to rise globally.
The significant growth can be attributed to the increasing demand for TSMC’s advanced semiconductor processes, such as its 5-nanometer and 3-nanometer technologies.
These advanced nodes are crucial for high-performance computing, 5G applications, and artificial intelligence, all of which are driving strong demand for TSMC’s products.
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Quarter-over-Quarter Comparison
Although TSMC posted excellent year-over-year growth, the company’s first-quarter results showed a slight decline compared to the previous quarter.
Revenue decreased by 3.4%, while net income fell by 3.5% compared to Q4 2024. This quarterly drop is in line with typical seasonal fluctuations in the semiconductor industry, where the first quarter is often weaker than the final quarter of the year.
| Metric | Q1 2025 | Q4 2024 | QoQ Change | Explanation |
|---|---|---|---|---|
| Revenue (NT$) | NT$839.25 billion | NT$868.72 billion (est.) | -3.4% | Seasonal drop after strong year-end demand for consumer electronics |
| Net Income (NT$) | NT$361.56 billion | NT$374.61 billion (est.) | -3.5% | Profit fell slightly as post-holiday demand cooled |
| EPS (NT$) | NT$13.94 | NT$14.44 (est.) | -3.5% | EPS followed net income trend with minor quarterly decline |
| Revenue (US$) | $25.53 billion | $26.90 billion (est.) | -5.1% | Impacted by NT dollar strength and seasonal revenue softening |
| Gross Margin | 58.8% | 53.1% (previous year Q1) | Stable QoQ | Margins remained strong due to 3nm ramp and pricing discipline |
| 3nm Revenue Share | 22% | Higher in Q4 (new product cycle) | Flat/Down Slightly | Early ramp phase in Q1 after heavy Q4 launches (e.g., Apple iPhone chips) |
Despite the quarterly decline, TSMC’s overall financial performance remains robust, reflecting its ongoing ability to navigate industry challenges and maintain a leading market position.
TSMC’s Financial Metrics
TSMC’s financial metrics for Q1 2025 reflect strong profitability, which is a key indicator of the company’s operational efficiency. The company reported:
- Gross Margin: 58.8%, a solid figure that reflects TSMC’s strong pricing power and operational efficiency.
- Operating Margin: 48.5%, indicating that the company maintains healthy margins despite a highly competitive market.
- Net Profit Margin: 43.1%, showing that TSMC remains a highly profitable business.
These margins are supported by the company’s leading-edge semiconductor manufacturing technologies, which allow it to command premium prices for its chips. As more devices and technologies rely on advanced semiconductors, TSMC’s financials should remain strong.
Focus on Advanced Technologies
A significant portion of TSMC’s revenue continues to come from advanced process technologies. In Q1 2025, shipments of 3-nanometer wafers accounted for 22% of total wafer revenue. This highlights the increasing demand for cutting-edge semiconductors used in high-performance computing, smartphones, and AI applications.
In addition to the 3-nanometer wafers, TSMC’s 5-nanometer process accounted for 36% of total wafer revenue, while the 7-nanometer process contributed 15%. Together, these advanced technologies accounted for 73% of TSMC’s total wafer revenue in the first quarter.
The high demand for TSMC’s advanced processes is largely driven by the growing need for powerful chips in artificial intelligence, high-performance computing, and mobile devices. As a result, TSMC continues to invest heavily in developing next-generation process nodes, ensuring its dominance in the semiconductor manufacturing space.
Semiconductor Industry Outlook
The semiconductor industry is expected to continue its strong growth trajectory over the next few years.
Factors driving this growth include the increasing adoption of 5G technology, the rise of artificial intelligence and machine learning, and the growing demand for more powerful chips in smartphones, data centers, and other consumer electronics.
TSMC is well-positioned to benefit from these trends, given its leadership in advanced semiconductor manufacturing.
As the demand for chips becomes more diverse and complex, TSMC’s ability to innovate and deliver high-performance, energy-efficient chips will be a key factor in its continued success.
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TSMC’s Long-Term Strategy
Looking ahead, TSMC remains focused on expanding its production capabilities for advanced semiconductor nodes, with plans to ramp up its 3-nanometer production and continue developing its 2-nanometer technology.
These efforts will help the company meet the increasing demand for cutting-edge chips in a variety of industries.
Additionally, TSMC is actively working on strengthening its global supply chain, with investments in new production facilities and partnerships aimed at reducing its reliance on a single region or supplier.
This strategic approach will help the company maintain its leadership position in the global semiconductor market.
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Conclusion
TSMC’s Q1 2025 results reflect a strong start to the year, with the company posting impressive revenue and profit growth. The continued demand for advanced semiconductor technologies, particularly in the fields of AI, 5G, and high-performance computing, has helped the company achieve its robust financial performance.
As TSMC continues to innovate and expand its manufacturing capabilities, it is well-positioned to maintain its leadership in the semiconductor industry for years to come.
Investors will likely continue to view TSMC as a key player in the rapidly evolving tech landscape, with strong prospects for future growth.
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