On Thursday, Taiwan Semiconductor Manufacturing Co. Ltd.’s (NYSE:TSM) first-quarter results beat forecasts, fueled by demand for advanced processor node technologies for artificial intelligence applications.
The contract chipmaker, a key supplier of chips for NVIDIA Corp. (NASDAQ:NVDA) GPUs and Apple Inc. (NASDAQ:AAPL) devices, forecast second-quarter revenue above analyst expectations.
Taiwan Semiconductor reported first-quarter revenue of $35.898 billion ($1.13 trillion New Taiwan dollars), up 35.1% year-over-year, topping the analyst consensus estimate of $35.500 billion.
Net income and earnings per share were 572.48 billion New Taiwan dollars and 22.08 New Taiwan dollars per share ($3.49), respectively, versus the analyst consensus of $3.31.
In dollar terms, revenue growth was 40.6% Y/Y and 6.4% Q/Q. The top-line performance aligned with the company’s guidance of $34.6 billion-$35.8 billion.
The company generated $22.1 million in operating cash flow for the quarter. It held $105.5 billion in cash and equivalents as of March 31, 2026.
The company said that 3-nm accounted for 25% of total revenue, 5-nm accounted for 36%, and 7-nm accounted for 13%. 7-nm and more advanced technologies accounted for 74% of total wafer revenue.
The board approved 6.00 New Taiwan dollars cash dividend for the fourth-quarter of 2025.
Margin Profile
Taiwan Semiconductor’s AI technology moat helped it expand its quarterly gross margins by 740 bps to 66.2%. Taiwan Semiconductor’s operating margin expanded by 960 bps to 58.1%.
The company now expects capital expenditure to land at the higher end of its $52 billion to $56 billion range, reflecting continued confidence in long-term AI demand and capacity expansion plans.
The increased spending aligns with its upgraded outlook of more than 30% annual revenue growth, signaling that investment in advanced manufacturing remains a priority as demand outpaces supply.
Executive Commentary From Earnings Call
CEO C.C. Wei said demand remains robust and customer feedback continues to point to a very positive outlook, reinforcing the company’s conviction in a multi-year AI growth cycle. He added that AI adoption is driving higher computational needs, which in turn boosts demand for leading-edge chips.
Management emphasized that capacity will likely remain tight through 2027, supporting pricing and margins, while reaffirming strong full-year growth above 30%.
At the same time, executives flagged rising input costs, softer demand in price-sensitive consumer segments, and macro uncertainties tied to geopolitics, though none are expected to disrupt near-term operations.
CFO Wendell Huang addressed concerns around supply disruptions, stating that the company does not expect near-term production interruptions.
He said Taiwan has secured sufficient liquefied natural gas supplies through at least May and that Taiwan Semiconductor is sourcing specialty gases such as helium and hydrogen from multiple regions, with no material impact expected on output.
Addressing competitive dynamics, Wei noted that customers such as Intel Corp. (NASDAQ:INTC) and Tesla, Inc. (NASDAQ:TSLA) can also be rivals, but emphasized that success in the foundry business ultimately depends on technology leadership, manufacturing excellence, and customer trust.
He added that there are “no shortcuts,” as building and ramping advanced fabs takes years, while reaffirming confidence in the company’s ability to retain and win business over time.
Outlook
Taiwan Semiconductor is guided for second-quarter 2025 revenue of $39.00 billion-$40.20 billion versus the $39.52 billion consensus estimate. It expects a gross margin of 65.5%-67.5% and operating profit margins of 56.5%-58.5%.
TSM Price Action: Taiwan Semiconductor shares were down 2.37% at $366.20 during premarket trading on Thursday. The stock is approaching its 52-week high of $390.20, according to Benzinga Pro data.
Photo by Jack Hong via Shutterstock
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