Introduction:
As the Q2 of 2025 nears its end, TSMC, the world’s largest contract chipmaker, finds itself grappling with twin financial headwinds. A strong local currency and looming U.S. policy shifts are tightening the screws on the company’s profit margins.
Reports from Economic Daily News and The Wall Street Journal indicate that the White House may revoke key export waivers for China-based semiconductor operations.
Simultaneously, a rapid surge in the New Taiwan dollar (NTD) is eroding the firm’s profitability, even as dollar-denominated revenue projections remain strong.
Follow us on Linkedin for everything around Semiconductors & AI
Quick Overview
U.S. may cancel tech export waivers for TSMC’s China operations.
The New Taiwan dollar surged 12% in Q2, squeezing profit margins.
TSMC’s Q2 revenue guidance assumed a weaker NTD rate.
Every 1% NTD gain cuts gross margin by 0.4 percentage points.
Investors expect TSMC to meet revenue but miss margin targets.
techovedas.com/67-6-market-share-how-tsmc-dominated-the-foundry-race-in-q1-2025
U.S. Export Waiver in Jeopardy
According to The Wall Street Journal, U.S. officials—led by Jeffrey Kessler, who oversees export controls at the Commerce Department—have informed major chipmakers, including TSMC, Samsung, and SK hynix, that the waivers allowing use of American technology at Chinese fabs may be revoked.
These waivers, originally granted in 2022, have enabled global semiconductor giants to continue operations in China without applying for licenses for every shipment of U.S.-origin tools or tech.
If revoked, companies would need individual U.S. licenses for such transactions—potentially disrupting supply chains and slowing production at Chinese fabs.
For TSMC, which operates in Nanjing and has business ties to China’s growing demand for advanced chips, the risk is not just logistical—it’s strategic.
techovedas.com/beyond-china-the-untold-truth-about-apple-global-manufacturing-network
NTD Strength Surge Hits Margins
On the home front, currency fluctuations are posing a more immediate financial threat.
TSMC generates most of its sales in U.S. dollars but incurs many operational costs in NTD. As the NTD strengthens, the company’s gross profit margin shrinks.
At TSMC’s June 3 shareholder meeting, CEO C.C. Wei warned that every 1% appreciation of the NTD lowers gross margin by 0.4 percentage points.
Since the start of Q2, the NTD has appreciated 12%, moving from around 33.7 to 29.529 per U.S. dollar as of June 20.
This appreciation is significant, especially since TSMC’s Q2 guidance was based on an assumed exchange rate of NTD 32.5/USD.
/techovedas.com/tsmc-projects-q4-revenue-of-up-to-26-9-billion-revises-2024-growth-forecast-to-30
Impact on Revenue and Margin Forecast
Despite the currency shock, TSMC Q2 revenue guidance remains intact. In its April earnings call, the company forecasted revenue between USD 28.4 billion and USD 29.2 billion—a quarter-over-quarter rise of nearly 13%, far above the consensus estimate of 6%.
But the strengthened NTD is expected to drag down margins. Analysts now believe that TSMC will meet revenue targets in U.S. dollars but fall toward the lower end of its margin guidance.
Here’s a breakdown of the estimated margin impact:
| Metric | Forecast Assumption | Current Reality (June 20) | Estimated Effect |
|---|---|---|---|
| Exchange Rate (NTD/USD) | 32.5 | 29.529 | 12% stronger |
| Gross Margin Impact (per 1% NTD gain) | -0.4% pt | -4.8% pts total | Margin squeeze |
| Projected Revenue (USD) | $28.4B – $29.2B | No major change | Guidance met |
What Investors Should Watch
TSMC will release its Q2 earnings in July, and the call is expected to focus heavily on two points:
- How the company plans to offset margin pressures amid currency volatility.
- How it prepares for potential U.S. export policy changes affecting its China strategy.
With these headwinds in play, institutional investors remain cautious. While TSMC’s revenue machine keeps humming thanks to strong AI chip demand, profitability could take a hit if these pressures persist into Q3.
Conclusion:
TSMC’s ability to deliver record revenue may not be enough to excite markets if profit margins shrink significantly.
The twin challenge of a surging NTD and shifting U.S. trade policies underscores the geopolitical and economic complexity facing even the most dominant players in the semiconductor space.
TSMC’s upcoming earnings call will be more than just a quarterly update—it will be a statement on how the chip giant plans to weather a world increasingly shaped by policy and currency swings.
For more of such news and views choose Techovedas! Your semiconductor Guide and Mate!
