Taiwan's leading semiconductor manufacturer TSMC reported record-breaking financial performance for the quarter ending September 30, 2025, with consolidated revenues reaching NT$989.92 billion. The company achieved net profits of NT$452.30 billion and diluted earnings per share of NT$17.44, equivalent to US$2.92 per American Depositary Receipt unit.
The chipmaker's third-quarter results demonstrated robust growth momentum, with revenues climbing 30.3% compared to the same period last year. Net income surged even more dramatically, posting a 39.1% year-over-year increase, while diluted earnings per share rose by 39.0%. Sequential quarterly growth also remained strong, showing a 6.0% revenue boost and 13.6% net income improvement over the second quarter of 2025.
When converted to US dollars, TSMC's third-quarter revenues totaled $33.10 billion, marking a substantial 40.8% annual increase and 10.1% quarterly growth. The company maintained impressive profitability metrics, including a gross margin of 59.5%, an operating margin of 50.6%, and a net profit margin of 45.7%. Leading financial publications have verified that these earnings represent TSMC's strongest quarterly profit performance in the company's history.
TSMC faces significant geopolitical threats from mainland China that extend beyond traditional business competition. The constant pressure from China creates strategic vulnerabilities for both TSMC and Taiwan, as the company's dominance in advanced semiconductor manufacturing has become a critical factor in cross-strait tensions. If China were to invade the island, the world would face an immediate supply shock with widespread delays in technology manufacturing, as many tech companies depend on components produced in Taiwan. China's expanding semiconductor capabilities, particularly through companies like SMIC (Semiconductor Manufacturing International Corporation), represent a long-term competitive challenge. SMIC has made significant progress in mature process nodes (28nm and above), with Chinese foundries expected to account for over 25% of global capacity among top mature-node foundries by the end of 2025. While mainland China lags behind in advanced AI chip manufacturing, its push for technological autonomy and domestic substitution – especially in automotive and industrial semiconductors – could gradually erode Taiwan's strategic advantage. The threat is compounded by concerns that TSMC's diversification of operations to locations like Arizona, while mitigating supply chain risks, could diminish Taiwan's "silicon shield" protection by reducing the strategic importance that deters Chinese aggression.
Strong Demand for advanced technologies
"Our business in the third quarter was supported by strong demand for our leading-edge process technologies," Senior Vice President and Chief Financial Officer Wendell Huang said.
The remaining technology nodes contributed as follows: 16/20-nanometer represented 7% of wafer revenue, 28-nanometer accounted for 7%, 40/45-nanometer contributed 3%, 65-nanometer made up 4%, 90-nanometer was 1%, 0.11/0.13-micrometer represented 1%, 0.15/0.18-micrometer accounted for 3%, and 0.25-micrometer and above contributed less than 1%.
AI chip demand drives growth
TSMC's record performance reflects surging demand from major AI chip designers, particularly NVIDIA and AMD, who rely heavily on TSMC's advanced manufacturing capabilities for their cutting-edge AI accelerators. NVIDIA is expected to overtake Apple as TSMC's biggest customer in 2025, underscoring the massive shift toward AI infrastructure spending. Both NVIDIA and AMD depend on TSMC's most advanced process nodes – 3nm and below – along with sophisticated packaging technologies like CoWoS (Chip-on-Wafer-on-Substrate) to produce the high-performance chips powering generative AI applications and data centers. AMD has committed to an annual release cadence for its AI accelerators, with future chips expected to utilize TSMC's cutting-edge 2nm technology. The company controls over 70% of the global foundry market and serves as the indispensable manufacturing partner for the AI revolution.
Revenue from Smartphone increased 19%, IoT increased 20%, and Automotive increased 18% from the second quarter. HPC remained flat, while DCE decreased 20% and Others declined 8% compared to the previous quarter.
From a geographic perspective, revenue from customers based in North America accounted for 76% of total net revenue in the third quarter. Revenue from Asia Pacific, China, Japan, and EMEA (Europe, Middle East, and Africa) accounted for 9%, 8%, 4%, and 3% of total net revenue respectively.
TSMC's third-quarter gross margin reached 59.5%, representing a 0.9 percentage point improvement from the previous quarter. This enhancement stemmed mainly from cost reduction initiatives and increased facility utilization rates, though these gains were somewhat diminished by adverse currency fluctuations and dilutive effects from international manufacturing operations.
Operating expenditures rose by NT$3.25 billion to NT$87.76 billion during the quarter, accounting for 8.9% of net revenues versus 9.1% in the prior quarter, reflecting improved operational efficiency. The company's operating margin strengthened by 1.0 percentage point quarter-over-quarter to 50.6%. Research and development investments totaled NT$63.74 billion, while sales, general and administrative costs amounted to NT$24.02 billion.
TSMC's annualized return on equity climbed to 37.8%, marking a 3.0 percentage point sequential increase and a 4.4 percentage point year-over-year improvement.Retry
Financial position and cash flow
TSMC's total current assets grew by NT$171.10 billion from the previous quarter, driven primarily by a NT$116.63 billion expansion in cash and marketable securities holdings. By the conclusion of the third quarter, the company's combined cash and marketable securities reached NT$2,751.06 billion. Meanwhile, total current liabilities contracted by NT$101.40 billion, largely attributed to a NT$111.70 billion reduction in accrued liabilities and other obligations. The semiconductor giant maintained net working capital of NT$2,160.11 billion with a current ratio of 2.7 times during the quarter.
The company's net cash reserves expanded by NT$100.07 billion to reach NT$1,756.61 billion in the third quarter, reflecting the growth in cash and marketable securities positions. Outstanding interest-bearing debt stood at NT$994.45 billion.Retry
"Moving into fourth quarter 2025, we expect our business to be supported by continued strong demand for our leading-edge process technologies," Huang stated.
Drawing from current market conditions and business projections, TSMC's leadership anticipates fourth-quarter revenues will fall within the US$32.2 billion to US$33.4 billion range. Using an exchange rate projection of 30.6 New Taiwan dollars per US dollar, company executives forecast gross profit margins between 59% and 61%, with operating profit margins expected to span 49% to 51%.
Understanding the results: A simplified explanation
For readers less familiar with financial terminology, here's what these results mean in everyday terms: TSMC operates as a specialized manufacturer – it doesn't design or sell its own chips, but instead produces semiconductors based on designs provided by technology companies around the world. This "pure-play foundry" business model, which TSMC pioneered, means the company focuses exclusively on manufacturing rather than competing with its customers.
The company's "nanometer" measurements refer to the size of transistors on computer chips – smaller numbers mean more advanced technology that can pack more computing power into the same space. TSMC manufactures about 60% of the world's contracted semiconductor production, making it the dominant player in this specialized manufacturing sector.
The strong financial results reflect several key trends: High-Performance Computing (which includes data centers and artificial intelligence systems) now represents more than half of TSMC's business, while smartphones contribute about one-third. The company's ability to maintain gross margins near 60% indicates strong pricing power and operational efficiency – for every dollar in sales, TSMC keeps approximately 60 cents after covering direct manufacturing costs.
TSMC's substantial capital expenditures of nearly $30 billion year-to-date represent ongoing investments in new factories and equipment to maintain its technological leadership and expand production capacity. The company was founded in 1987 in Taiwan and remains headquartered in Hsinchu, with operations expanding globally to serve customers across multiple continents.
