TSMC reports strong start to year, denies rumours of Intel tie-up

(Sharecast News) - Taiwan Semiconductor Manufacturing Company (TSMC) reported a robust start to 2025 on Thursday, posting a 60.3% year-on-year increase in first-quarter net income to TWD 361.56bn (£8.39bn) and a 41.6% rise in revenue to TWD 839.25bn. The results surpassed analyst expectations, and were driven by sustained demand for high-performance chips used in artificial intelligence and 5G applications.

Despite geopolitical and trade pressures, including potential US tariffs and tighter export controls on clients such as Nvidia and AMD, TSMC maintained its full-year revenue growth forecast of 24% to 26% in dollar terms.

The company said it had not seen any shift in customer behaviour due to trade developments, and reiterated its capital spending guidance of $38bn to $42bn for the year.

Advanced process technologies, specifically seven-nanometer and below, accounted for 73% of wafer revenue in the first quarter.

High-performance computing, including AI chips, represented 59% of total sales and continued to fuel growth.

TSMC projected AI-related revenue would double this year, with second-quarter revenue expected to reach between $28.4bn and $29.2bn, up significantly from $20.8bn in the same period last year.

While reaffirming its growth trajectory, TSMC warned that increasing overseas production costs, especially in the US and Japan, would pressure margins over the next five years.

Gross margin for the current quarter was forecast between 57% and 59%, down slightly from 58.8% in the first quarter.

Chief financial officer Wendell Huang noted that overseas expansion could dilute margins by up to four percentage points in the longer term, though TSMC was aiming to keep gross margins above 53% through operational efficiencies.

Amid rising trade tensions, TSMC last month committed an additional $100bn to expand its US manufacturing footprint, bringing its total investment in the country to $165bn.

The plan includes six fabs and two advanced packaging plants in Arizona.

Chief executive officer CC Wei said the company was accelerating the timeline for its second Arizona fab, which will produce three-nanometer chips, while confirming that the two-nanometer process would begin mass production in Taiwan later this year.

TSMC also denied reports that it was considering a joint venture with struggling US chipmaker Intel.

Wei firmly stated that TSMC was not engaged in any talks regarding joint ventures, technology licensing, or technology transfers with any company.

The denial followed speculation that TSMC could take a stake in Intel's fabrication operations under pressure from US policymakers.

Despite strong fundamentals, TSMC shares had underperformed in 2025.

Its Taipei-listed stock was down over 20% year-to-date, as foreign investors had pulled out more than $8.6bn amid uncertainty over US trade policy.

TSMC is also expanding globally with new fabs in Japan and a planned facility in Germany, while continuing to invest heavily in Taiwan with plans for 11 new fabs and four IC packaging plants in the coming years.

The company said it expected about 30% of its future two-nanometer capacity to be located in the US, marking a significant shift in the geographic distribution of its most advanced production.

Reporting by Josh White for Sharecast.com.