Taiwan Semiconductor Manufacturing Co (TSMC), the largest contract chipmaker globally, is projected to report a record second-quarter net profit of T$377.4 billion (US$12.9 billion), according to an LSEG SmartEstimate from 21 analysts.

The company will disclose its earnings and provide third-quarter guidance on July 15, 2025, during a conference call at 0600 GMT.

The expected profit represents a 52% increase compared to the same quarter last year. This follows a previously reported 38.6% rise in second-quarter revenue.

If the profit exceeds T$374.68 billion (US$12.8 billion), it will mark TSMC’s highest quarterly net income and the sixth consecutive quarter of profit growth.

Demand for chips related to AI has contributed to TSMC’s growth. Industry revenue for semiconductor foundries is expected to grow by 17% to 18% this year.

TSMC’s sales could potentially increase by around 30%, according to Mario Morales, group vice president at research firm IDC.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Currency headwinds present significant margin challenges despite AI boom

TSMC estimates that every 1% appreciation in the Taiwan dollar reduces its operating margin by 0.4 percentage points, creating a significant financial challenge with the currency’s 12% appreciation against the USD this year 1.

The company has employed financial strategies to counter these effects, including a $100 billion capital injection into overseas subsidiaries to address the surging Taiwan dollar 2.

June 2025 data illustrates the severity of this impact, with TSMC reporting a 17.7% month-over-month revenue decline attributed to currency fluctuations despite strong underlying demand 3.

These currency challenges have prompted TSMC to implement natural hedging strategies to maintain its projected gross margins of 57-59% and operating margins of 47-49% for Q2 1.

The situation highlights a critical balancing act for semiconductor manufacturers with global supply chains but concentrated manufacturing, where financial performance can be significantly impacted by macroeconomic factors beyond their control.

2️⃣ AI-driven demand fuels record growth despite headwinds

Despite currency and tariff concerns, TSMC’s Q2 revenue increased 38.65% year-over-year to NT$933.792 billion, demonstrating the growth driven by AI applications 4.