TSMC's semiconductor manufacturing business is thriving strongly
In a world where companies worldwide are rapidly building massive data centers to meet the growing demand for computing power, Taiwan Semiconductor Manufacturing Company (TSMC) is at the forefront of the AI revolution.
TSMC reported record-breaking revenue of $30.07 billion in Q2 2025, a 38.6% year-over-year increase, with high-performance computing (HPC), driven largely by AI chip demand, accounting for 60% of wafer revenue.
Several key factors underpin this surge. TSMC’s growth is tightly linked to the explosive demand for chips powering generative AI, autonomous systems, and large language models. The increasing volume of AI model usage has caused a surge in the need for leading-edge silicon, with TSMC specifically citing “sovereign AI” (government-backed AI initiatives) as a new growth driver.
TSMC’s cutting-edge nodes (3nm, 5nm, and 7nm processes) represent 74% of total wafer revenue, catering to the most demanding AI workloads. These high-margin technologies are critical for AI accelerators, CPUs, and GPUs.
The company has shifted away from smartphone-centric revenue toward HPC and AI, which now make up nearly 60% of total sales, up from 52% in 2024. This pivot is a deliberate response to the rapid adoption of AI across industries.
Anticipating sustained demand, TSMC plans to build over 15 new fabrication plants in coming years, further solidifying its manufacturing capacity for advanced AI chips.
TSMC’s gross margin reached an unprecedented 58.6%, with a net profit margin of 42.7%, reflecting strong pricing power and efficient scale in a high-demand environment.
While TSMC benefits from this global AI boom, leading chip developers—especially Nvidia and AMD—are struggling to meet demand, creating bottleneck effects in the broader tech ecosystem. The voracious appetite for AI chips has outpaced available foundry capacity at TSMC, which is the primary supplier for both Nvidia (GPUs) and AMD (CPUs/GPUs).
This article does not provide specific figures for TSMC's third-quarter revenues or net profit. However, it is expected that TSMC's growth will continue, given the robust growth of high-performance AI applications and TSMC's strategic position in the industry.
In contrast, chip developers like Nvidia and AMD, despite their innovation and market reach, are struggling to keep up with demand due to TSMC’s capacity limits and the complexity of advanced packaging—highlighting TSMC’s pivotal role as the foundational enabler of the global AI infrastructure.
A summary table comparing TSMC, Nvidia, and AMD in the AI era is provided, highlighting each company's role, revenue driver, supply constraint, margins, valuation, and market position.
In conclusion, TSMC's revenue growth in the AI era is propelled by surging demand for advanced chips, a strategic shift toward AI/HPC, and industry-leading manufacturing scale and technology. Meanwhile, chip developers like Nvidia and AMD, despite their innovation and market reach, are struggling to meet demand due to TSMC’s capacity limits and the complexity of advanced packaging—highlighting TSMC’s pivotal role as the foundational enabler of the global AI infrastructure.
In the context of TSMC's record-breaking Q2 2025 revenue, business growth is significantly tied to the finance sector, specifically AI chip demand, within the technology industry. TSMC's primary revenue drivers, such as high-performance computing (HPC), are fuelled by the increasing demand for AI chips, and its cutting-edge technologies are essential for AI accelerators, CPUs, and GPUs.
