• Revenue: USD25.5 billion for Q1 2025, a decrease of 5.1% in US dollars.
• Gross Margin: 58.8%, a decrease of 0.2 percentage points sequentially.
• Operating Margin: 48.5%, a decrease of 0.5 percentage points sequentially.
• EPS: TWD13.94 for Q1 2025.
• ROE: 32.7% for Q1 2025.
• Cash and Marketable Securities: TWD2.7 trillion (USD81 billion) at the end of Q1 2025.
• CapEx: USD10.06 billion for Q1 2025.
• Cash from Operations: TWD626 billion for Q1 2025.
• 3-nanometer Process Technology Revenue: 22% of wafer revenue in Q1 2025.
• 5-nanometer Process Technology Revenue: 36% of wafer revenue in Q1 2025.
• 7-nanometer Process Technology Revenue: 15% of wafer revenue in Q1 2025.
• Advanced Technologies Revenue: 73% of wafer revenue for technologies 7-nanometer and below.
• HPC Revenue: Increased 7% quarter-over-quarter, accounting for 59% of Q1 2025 revenue.
• Smartphone Revenue: Decreased 22%, accounting for 28% of Q1 2025 revenue.
• IoT Revenue: Decreased 9%, accounting for 5% of Q1 2025 revenue.
• Automotive Revenue: Increased 14%, accounting for 5% of Q1 2025 revenue.
• DCE Revenue: Increased 8%, accounting for 1% of Q1 2025 revenue.
• Accounts Receivable Turnover Days: Increased to 28 days.
• Days of Inventory: Increased to 83 days.
• Second Quarter 2025 Revenue Guidance: USD28.4 billion to USD29.2 billion.
• Second Quarter 2025 Gross Margin Guidance: 57% to 59%.
• Second Quarter 2025 Operating Margin Guidance: 47% to 49%.
• Second Quarter 2025 Tax Rate: Around 20%.

• Warning! GuruFocus has detected 4 Warning Signs with BOM:534618.

Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TSMC's first quarter revenue was slightly above the midpoint of guidance despite challenges such as smartphone seasonality and an earthquake.
• Advanced technologies, defined as 7-nanometer and below, accounted for 73% of wafer revenue, indicating strong demand for cutting-edge processes.
• TSMC expects a 13% sequential increase in second-quarter revenue, driven by strong demand for 3-nanometer and 5-nanometer technologies.
• The company plans to double its CoWoS capacity in 2025 to meet robust AI-related demand, indicating confidence in future growth.
• TSMC announced an additional $100 billion investment plan to expand its capacity in Arizona, demonstrating commitment to meeting customer demand and geographic flexibility.

Negative Points

• First quarter revenue decreased 3.4% sequentially in NT dollars, impacted by smartphone seasonality.
• Gross margin decreased by 0.2 percentage points due to the earthquake and overseas dilution, with further margin dilution expected from overseas fabs.
• Operating margin decreased by 0.5 percentage points sequentially to 48.5%, reflecting operational challenges.
• TSMC anticipates a 2% to 3% margin dilution impact for the full year 2025 due to overseas fab costs, which could widen to 3% to 4% in later years.
• There are uncertainties and risks from potential tariff policies, which could impact end-market demand and revenue growth.

Q & A Highlights

Q: Can you provide an update on the AI-related demand, specifically regarding CoWoS capacity and supply versus demand? A: C.C. Wei, Chairman and CEO, stated that while CoWoS demand was previously much higher than supply, the situation has improved slightly. TSMC is working to double CoWoS capacity, which remains fully loaded. The demand is expected to remain strong into 2026, and efforts are being made to balance supply and demand.

Q: What is TSMC's perspective on the US expansion and the potential impact of semiconductor tariffs? A: C.C. Wei explained that the expansion in Arizona is driven by customer demand, particularly from major US companies like Apple and NVIDIA. TSMC is working with the US government to expedite necessary permits. Wendell Huang, CFO, added that geographic manufacturing flexibility is part of TSMC's value proposition, and pricing strategies are being discussed with major customers.

Q: How does TSMC view the geopolitical risks, such as the recent ban on H20 in China, and its impact on production planning? A: C.C. Wei assured that TSMC has considered these factors in its full-year growth outlook. Despite potential impacts from tariffs, no changes in customer behavior have been observed, and TSMC remains committed to its forecast.

Q: With the strong demand for US capacities, can TSMC accelerate the timeline for the Arizona expansion? A: C.C. Wei confirmed that efforts are underway to speed up production in the second fab and construction of the third fab in Arizona. The timeline is being adjusted based on customer demand, although labor shortages and permit requirements pose challenges.

Q: What is TSMC's approach to shareholder returns, and why not adopt a share buyback policy? A: Wendell Huang stated that TSMC has studied this and concluded that a sustainable and steadily increasing dividend is a better way to return cash to shareholders. The company maintains this policy despite the strength of its cash position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.