TSMC: GPUs compensate for weakening smartphones
TSMC grows thanks to demand for modern semiconductors. AI accelerators dampen the weakening end customer market.
(Image: c't)
The world's largest chip contract manufacturer TSMC continues to benefit from the hype surrounding artificial intelligence (AI). Continued high demand, particularly for AI accelerators, cushioned the seasonally weak smartphone market in the first quarter, TSMC writes in its annual report.
TSMC generated revenue of 25.53 billion US dollars in the first three months of the year. After deducting operating costs, research and development expenses and administrative costs, operating profit amounted to just under 12.4 billion US dollars. With interest and after taxes, net profit amounted to almost exactly USD 11 billion. The record quarter at the end of 2024 is thus followed by the second most successful quarter.
(Image:Â Taiwan Semiconductor Manufacturing Co., Ltd.)
Compared to the end of 2025, turnover fell by just five percent. Calculated in Taiwan dollars, it is just 3.4 percent. Compared to the same period last year, TSMC grew extremely strongly by 42 percent. At that time, the AI hype was just beginning – since then, the chip contract manufacturer has significantly expanded production, especially for Nvidia. Cash flow increased by 43 percent to 19 billion US dollars within a year.
The manufacturer puts the net margin at 58.8 percent and the operating margin at 48.5 percent. TSMC now spends 1.72 billion US dollars per quarter on research and development.
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Sales broken down by process
The revenue shares of the two most modern production generations remain at a consistently high level: the 5-nanometer generation has the highest share of 36 percent. This also includes the optimized 4nm variants – one of which Nvidia uses for all of its current GPUs, including the graphics chips for the GeForce RTX 5000 graphics cards. AMD has also switched to 4nm technology for most of its GPUs and CPUs.
The 3nm generation accounts for 22 percent, including Apple's processors for iPhones, iPads, MacBooks and Macs, Intel's compute chips and Mediatek's mobile processors for Android smartphones.
(Image:Â Taiwan Semiconductor Manufacturing Co., Ltd.)
If you offset TSMC's figures, chip production accounts for around 85 percent of sales, or roughly just under 22 billion US dollars. The remaining 3.6 billion or so should largely come from packaging, i.e. the further processing of chips on carriers. AI accelerators in particular use complex constructions often consisting of several compute chips and HBM memory stacks on a large silicon interposer.
Positive stock market sentiment
In the current second quarter, TSMC expects a turnover of 25 billion to 25.8 billion US dollars and a net margin of between 57 and 59 percent.
Following the announcement of the business figures, TSMC's share price shot up by seven percent. Since then, the share price has fallen again slightly. In general, the share price has been fluctuating strongly for months, with a downward trend. The US tariff policy is likely to contribute to the instability.
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