• TSMC’s second-quarter net profit rose 77% year-over-year to NT$706.56 billion (US$21.98 billion), surpassing the FactSet consensus estimate of NT$624.00 billion.
  • Revenue climbed 36% to NT$1.270 trillion, in line with the company’s guidance, as the chipmaker benefited from high utilization rates and improved efficiency.
  • Gross margin reached 67.7%, the highest level in more than 20 years, as depreciation and dilution from the 2-nanometer ramp-up were offset by strong demand.
  • The company said it remains capacity-constrained and is accelerating expansion in both advanced nodes and chip packaging.

Gross margin hits 67.7% as utilization rates drive efficiency

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker and a key supplier for Apple and Nvidia, reported its fifth consecutive quarter of record earnings on Thursday, driven by what the company has described as “extremely robust” demand for AI-related chips.

Net profit for the quarter ended June 30 jumped 77% from a year earlier to NT$706.56 billion, equivalent to US$21.98 billion, according to a Wall Street Journal report citing the company’s earnings release. The result far exceeded the NT$624.00 billion that analysts had expected, based on a FactSet consensus estimate. Revenue rose 36% to NT$1.270 trillion, matching the company’s previous guidance.

The strong performance comes amid a broader industry shift from generative AI toward more computationally intensive agentic AI applications, a transition that TSMC executives have cited as a driver of continued growth. The results also follow a similar signal from Dutch semiconductor-equipment maker ASML, which on Wednesday raised its annual sales outlook to the equivalent of between US$49.3 billion and US$51.6 billion, citing “extremely strong” AI-driven orders for its extreme ultraviolet lithography machines.

TSMC’s gross margin reached 67.7% in the second quarter, its highest level in more than two decades. The margin improvement came as high utilization rates and operational efficiency gains offset rising depreciation costs and the dilutive effects of the company’s ongoing 2-nanometer production ramp-up, the company said.

The Taiwan-based chipmaker described itself as capacity-constrained and said it is accelerating capacity expansion in both advanced process nodes and advanced chip packaging, a critical bottleneck in the AI supply chain.

Shares of TSMC listed in Taipei rose 37% during the second quarter, bringing year-to-date gains to nearly 60%. Citi Research raised its target price on the stock to NT$3,800 from NT$2,875 earlier this month, citing sustained demand for TSMC’s leading-edge chips and improving longer-term visibility.

Addressing concerns about potential market-share losses to rivals Samsung and Intel, Chief Executive C.C. Wei said in June that TSMC’s technological leadership, manufacturing efficiency and customer trust will keep the company firmly in the lead, the Journal reported.