TSMC, the world's largest contract chipmaker, reported first-quarter revenue of T$839.25 billion ($25.55 billion), beating market forecasts, as the company reaps the benefit from artificial intelligence demand.

Taiwan Semiconductor Manufacturing Co.’s quarterly revenue rose a larger-than-anticipated 42%, reflecting strengthening demand for AI servers and smartphones before US tariffs kicked in.

That marked TSMC’s fastest pace of growth since 2022. Electronics manufacturers had stockpiled goods in US warehouses in anticipation of potential trade and shipping disruptions.

The main chipmaker for Apple Inc. and Nvidia Corp. reported revenue of NT$839.25 billion ($25.5 billion) in the first three months of 2025. Analysts on average expected roughly NT$830.5 billion. The company reports full quarterly earnings on Thursday, April 17.

Its results coincide with growing concerns about how tariffs may disrupt demand for electronics such as iPhones. Over the weekend, Americans rushed to pick up Apple’s marquee device, fearing it may raise prices to cover the additional cost.

Q1 Results Outlook

TSMC’s Full-Year Guidance at Risk Amid Tariff Impact

There are signs that the pace of spending on datacenters and AI chips may be slowing somewhat. Microsoft Corp., for one, has pulled back on projects around the world, suggesting it’s rethinking plans.

Some analysts warned TSMC might have to cut its full-year revenue target for growth in the mid-20% range, reflecting global uncertainty and the potential hit to economies. Its outlook is overshadowed also by Trump’s threats to slap tariffs on semiconductor imports, although it is unclear when or whether that may happen.

Investors will also be focused on the demand dynamics for leading-edge nodes (N2, N3), especially from key customers Apple and Qualcomm, N7 node recovery trajectory, US fab cost pressures from tariffs, the strategic relationship with Intel, and confirmation of extended CoWoS constraints will also be critical.

President Donald Trump said he told the Taiwan Semiconductor Manufacturing Company, which has pledged to build new factories in the United States, it would pay a tax of up to 100% if it did not build its plants in the country.

Speaking at a Republican National Congressional Committee event, Trump criticized former President Joe Biden's administration for providing a $6.6 billion grant to TSMC's U.S. unit for semiconductor production in Phoenix, Arizona, saying semiconductor companies do not need the money.

In March, TSMC, the world's biggest contract chipmaker, said at the White House that it plans to make a fresh $100 billion investment in the U.S. that includes building five additional chip facilities in coming years.

Still, TSMC remains the world’s leader in the production of advanced semiconductors used for artificial intelligence and smartphones. That could cushion the impact of tariffs or trade disruptions.

Analysts’ Opinions

Susquehanna analyst Mehdi Hosseini reiterated his Positive rating on TSMC. "Recent checks suggest TSM's [chip] wafer shipment and ASP [average selling price] trends remain intact," he wrote.

Hosseini said TSMC could benefit from a tariff rule that says if at least 20% of an imported item's value is "produced or transformed in the U.S.," the tariffs will be levied on the non-U.S. content. The analyst noted 70% of the TSMC's revenue is generated from American companies and its chips could potentially meet some of the U.S. content value requirements, which would lower the level of tariffs on technology products.

"The impact of the new tariff regime on TSM could be contained and lessened given its mix of U.S.-based customers," the analyst wrote.

Citi analysts adjusted their outlook on TSMC (2330:TT) (NYSE:TSM), reducing the stock’s price target from TWD1,400 to TWD1,050. Despite the downward revision, the firm has maintained its Buy rating on the shares of the world’s largest dedicated independent semiconductor foundry. Currently trading at $158.75, TSMC commands a market capitalization of $644 billion and boasts a "GREAT" financial health score according to InvestingPro metrics.

The adjustment by Citi reflects concerns over the potential impact of tariffs and the broader global economic climate on the semiconductor industry. Citi’s analyst Laura Chen pointed out that although current US tariffs do not directly affect semiconductors, the industry could still face challenges if the trade tensions between the US and China escalate. Despite these concerns, TSMC maintains robust fundamentals with a 56% gross profit margin and impressive revenue growth of 34% in the last twelve months.