TSMC Profits surge due to high demand from AI sector
Taiwan Semiconductor Manufacturing Company (TSMC) is riding a wave of success, with its 3nm and 5nm node semiconductor chips powering a significant surge in demand, particularly for AI-related devices and high-performance computing (HPC) applications. This trend is translating into substantial revenue growth and planned investments in semiconductor infrastructure.
In the second quarter of 2025, TSMC's revenue reached an impressive $30.1 billion, surpassing expectations, with 3nm nodes accounting for 24% and 5nm nodes for 36% of total revenue. High-performance computing, which includes AI chips, made up 60% of TSMC's revenue, showcasing the impact of AI infrastructure spending as a major growth driver.
Profitability has also improved, with gross margin rising to 58.6%, operating margin to 49.6%, and net profit margin to 42.7% in Q2 2025. This reflects the shift to advanced nodes like 3nm and 5nm.
TSMC is capitalising on this momentum by making significant investments in semiconductor manufacturing. The company plans to build 11 new fabs in Taiwan to meet the rising demand for AI chips. TSMC is also actively ramping up production in the US (Arizona) and Japan, with the company expediting volume production of 4nm in Arizona, while 2nm, 3nm, and 5nm productions are ramping up simultaneously in Taiwan for both smartphone and AI applications.
TSMC's commitment to supporting AI demand globally is evident in its record capital expenditure of nearly $20 billion year-to-date 2025, and plans to invest $165 billion in US semiconductor manufacturing to accelerate chip production by several quarters.
The ongoing global ramp-up in AI infrastructure spending is expected to maintain strong demand for TSMC’s advanced nodes through 2025 and beyond, as indicated by sustained growth in AI/HPC-related chips. Although uncertainties exist, such as potential US tariffs, these have not yet impacted customer behaviour significantly, and TSMC remains optimistic about robust semiconductor demand fundamentals.
In conclusion, TSMC's 3nm and 5nm chips are at the core of the company's growth, fuelled by the booming AI market, with planned capital investments and new fab constructions designed to meet the projected surge in AI infrastructure investments worldwide. TSMC is the only game in town for AI chip designers like Nvidia and Advanced Micro Devices, making it the dominant player in the leading-node portion of the foundry market. With the growth in AI, TSMC's advanced nodes will remain in high demand for the foreseeable future.
- Leveraging the success of its 3nm and 5nm chips in powering AI-related devices and high-performance computing applications, TSMC plans to invest in artificial-intelligence technology, specifically by building 11 new fabs in Taiwan to cater to the rising demand for AI chips.
- TSMC's commitment to the AI market is further demonstrated through its substantial investment in artificial-intelligence infrastructure, as shown by the company's record capital expenditure of nearly $20 billion year-to-date 2025, with plans to invest $165 billion in US semiconductor manufacturing for accelerated chip production.
