TSMC's chip-manufacturing sector is thriving robustly
In the rapidly evolving technological landscape, Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is thriving. The key to its success lies in its strategic shift towards AI infrastructure, a move that has propelled TSMC to the forefront of high-performance computing (HPC) and AI accelerator chips used in data centers.
In Q2 2025, an impressive 59% of TSMC's revenue came from HPC/AI chips, primarily produced at advanced process nodes like 7nm and smaller. This strategic realignment has enabled TSMC to achieve a 38.6% year-over-year revenue increase in Q2 2025 to $31.7 billion, with net income soaring 60.7% to $13.5 billion, marking record-high profits driven by AI chip demand.
To meet the growing demand, TSMC is investing heavily, with plans to spend around $38 to $42 billion in 2025 and a $100 billion global expansion plan targeting advanced manufacturing facilities in the U.S. (Arizona), Japan, and Germany. These investments are aimed at scaling production of cutting-edge 3nm and 5nm chips, which are critical for AI applications.
TSMC's CoWoS 2.5D advanced packaging technology, capable of handling complex AI chip designs, is also ramping up wafer production from 70,000 per month in 2025 to an expected 90,000 by 2026, supporting higher-performance AI chip manufacturing.
Being a key supplier to AI-centric companies like Nvidia and other major AI server makers secures strong, consistent demand for TSMC’s advanced chips, underpinning continued growth. Despite concerns about U.S. trade tariffs, TSMC’s CEO expects AI-driven demand to remain robust in the near-term, with an overall 2025 revenue growth forecast raised to around 30% in U.S. dollar terms due to booming AI demand.
For the third quarter, TSMC expects revenues of between 31.8 and 33 billion US dollars, significantly higher than analysts' expectations. However, it's important to note that the exact factors contributing to this anticipated growth in the third quarter have not been explicitly stated.
The growth in TSMC's profits and revenues is undeniably linked to the rapid growth of AI applications. Companies worldwide are building massive data centers at a rapid pace, struggling to keep up with the demand for computing power. TSMC, with its strategic focus, substantial investments, advanced packaging innovations, and strong partnerships with AI ecosystem leaders, is undoubtedly benefiting from this megatrend.
The strategic focus on AI infrastructure by TSMC, as evidenced by the 59% revenue share from HPC/AI chips in Q2 2025, has been a critical factor in its success and revenue growth. The company's investments in advanced manufacturing facilities and scaling production of 3nm and 5nm chips, along with its CoWoS 2.5D technology for handling complex AI chip designs, further emphasize its commitment to artificial-intelligence technology.
