Today's event is being webcast live through TSMC's website at www.tsmc.com, where you can also download the earnings release materials if you are joining us through the conference call. Wendell Huang, will summarize our operations in the second quarter 2025, followed by our guidance for the third quarter 2025. Wendell Huang, for the summary of operations and the current quarter guidance. After that, I will provide the guidance for the third quarter of 2025.
Second quarter revenue increased 11.3% sequentially in NT, as our business was supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies, partially offset by an unfavorable foreign exchange rate. In US dollar terms, revenue increased 17.8% sequentially to $30.1 billion and exceeded our second quarter guidance. Gross margin decreased 0.2 percentage points sequentially to 58.6%, primarily due to an unfavorable foreign exchange rate and margin dilution from our overseas fabs, partially balanced by higher capacity utilization and cost improvement efforts. Due to operating leverage, operating margin increased 1.1 percentage points sequentially to 49.6%.
Overall, our second quarter EPS was NT 15.36, up 60.7% year over year, and ROE was 34.8%. 3-nanometer process technology contributed 24% of wafer revenue in the second quarter, while 5-nanometer and 7-nanometer accounted for 36% and 14% respectively. Advanced technologies, defined as 7-nanometer and below, accounted for 74% of wafer revenue. Moving on to revenue contribution by platform, HPC increased 14% quarter over quarter to account for 60% of our second quarter revenue.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2025 | $31.8B-$33.0B (+8% QoQ / +38% YoY at midpoint) |
| Gross margin | Q3 2025 | 55.5%-57.5% (-210 bps at midpoint) |
| Operating margin | Q3 2025 | 45.5%-47.5% |
| FX assumption | Q3 2025 | $1 = NT29 (NT appreciates ~6.6% (≈260 bps margin headwind)) |
| Full-year revenue growth | FY 2025 | around 30% (USD) (raised) |
| Capital budget | FY 2025 | $38B-$42B (maintained) |
| Metric | YoY | Note |
|---|---|---|
| EPS | +60.7% | Reached TWD 15.36 on strong 3nm/5nm demand and operating leverage. |
| Revenue | — | Up 17.8% sequentially in USD to $30.1B on robust AI/HPC demand; explicit YoY not given, though Q3 guided +38% YoY at midpoint. |
| Operating margin | — | Rose 1.1 points sequentially to 49.6% on operating leverage; YoY not disclosed. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI / HPC demand | Robust AI/HPC demand | Getting stronger and stronger; explosive token growth; sovereign AI rising | Increasing |
| Foreign exchange headwind | — | NT appreciation cut Q2 margin ~180 bps, ~260 bps expected in Q3; ~40 bps sensitivity per 1% move | Worsening |
| Overseas expansion / dilution | Overseas dilution beginning | $165B US plan (6 fabs); Arizona dilution >100 bps in Q2, 2%-3% early to 3%-4% later; ~30% of 2nm+ capacity in Arizona | Expanding |
| N2 / A16 / A14 roadmap | — | N2 volume production H2 2025 (ramp similar to N3, takeouts above N3/N5); N2P and A16 H2 2026; A14 in 2028 with SPR in 2029 | Advancing |
| Gross margin / earning value | — | Held 58.6% despite FX; long-term 53%+ 'and higher' achievable via the six profitability factors | Stable |
| Non-AI recovery / tariffs | Mild non-AI recovery | Mild non-AI recovery; China rebates short-term; prudent on tariff and price-sensitive risks | Mixed |