Taiwan Semiconductor Manufacturing Co. reported a 60.3% jump in first-quarter profit as robust demand for artificial intelligence chips cushioned the seasonal decline in smartphone sales. Net income climbed to NT$361.56 billion ($25.53 billion) in the three months ended March, the Hsinchu-based company said Thursday.
Revenue rose 41.6% year-over-year to NT$839.25 billion while falling 3.4% from the previous quarter. The company’s performance highlights continued strength in AI-related demand, with revenue from its advanced 3-nanometer chips accounting for 22% of total wafer revenue.
“Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand,” Chief Financial Officer Wendell Huang said in a statement. Revenue from high-performance computing surged to 59% of TSMC’s total sales in Q1, up from 53% in the previous quarter, as AI server demand intensified.
The world’s largest contract chipmaker forecast second-quarter revenue will reach between $28.4 billion and $29.2 billion, representing substantial growth from the first quarter. However, TSMC warned that “uncertainties and risks from the potential impact from tariff policies exist,” a reference to geopolitical tensions and potential trade restrictions.
TSMC’s gross margin was 58.8% in the quarter, slightly down from 59% in the previous period but significantly higher than the 53.1% recorded a year earlier. The company cited January’s earthquake in Taiwan and the start of dilution from its overseas fabs as factors affecting margins, though cost improvements helped mitigate these pressures.
The company, which supplies chips to Apple Inc. and Nvidia Corp., reaffirmed its 2025 revenue growth target of “close to mid-20s percent” in US dollar terms and maintained its five-year outlook for revenue to grow at a compound annual rate approaching 20% through 2029.
TSMC’s expansion plans remain on track despite trade tensions, with the company recently announcing it would increase its planned investment in Arizona to $165 billion. Days of inventory increased to 83 days from 80 days in the fourth quarter, primarily due to the ramping of new overseas facilities.
