Taiwan Semiconductor Manufacturing Company (TSMC) reported second-quarter earnings that blew past Wall Street expectations, with net income surging 77.4% to a record NT$706.56 billion. The results were driven by insatiable demand for advanced artificial intelligence chips, pushing quarterly profit above NT$700 billion for the first time. Revenue climbed 36% year-on-year to NT$1.270 trillion (US$40.2 billion), while diluted earnings per share reached NT$27.25, or $4.31 per American depositary receipt.
The standout figure was an operating margin of 60.3%, which came 1.8 percentage points above management’s own guidance ceiling. Gross margin hit 67.7%, narrowly exceeding the forecast range of 65.5% to 67.5%. The company attributed the margin strength to cost reductions and higher factory utilisation, which more than offset dilution from overseas plants. High-performance computing now accounts for 66% of wafer revenue, up from 61% in the prior quarter.
TSMC also disclosed that revenue from its 2-nanometer process contributed 3% of wafer sales for the first time. Advanced nodes (7nm and below) represented 77% of wafer revenue. However, the main bottleneck remains advanced packaging: CoWoS capacity is still tight, though new production lines are expected to narrow the supply-demand gap by the end of 2026. A TrendForce report projects TSMC’s CoWoS capacity will reach 120,000–140,000 wafers per month this year.
Non-operating gains of NT$95.83 billion, including NT$63.2 billion from the disposal and mark-to-market revaluation of Vanguard International Semiconductor shares, provided a one-time boost. Still, operating income rose 65.4% to NT$766.6 billion, showing that core manufacturing performance was exceptionally strong.
Investors will now focus on the earnings call for updated full-year guidance. Analysts at Bank of America expect TSMC to raise its revenue growth outlook and possibly increase capital expenditure to around $58 billion, above the current $52–56 billion range. With AI demand remaining healthy, the semiconductor giant appears well-positioned, though sustained margins near 60% will be a key question as 2nm production scales.
