TSMC earnings preview: AI chip demand and trade tensions in focus

Written by

Fabien Yip

Market Analyst

When is TSMC reporting Q1 2025 earnings?

Taiwan Semiconductor Manufacturing Company (TSMC) will release its first quarter 2025 results at 2.00pm (Taiwan time) on Thursday 17 April, offering key insights into semiconductor industry trends and AI demand.

TSMC earnings expectations

TSMC, the manufacturing specialist of chips for major technology giants like Apple, NVIDIA, Braodcom, and Qualcomm, has already released a preliminary report showing first-quarter revenue of NT$839.25 billion, exceeding market expectations with an impressive 42% year-on-year (YoY) growth. This acceleration demonstrates continued momentum in the semiconductor space, particularly in advanced chip manufacturing.

Investors are expecting net income to grow around 57% YoY to NT$354 billion, matching the strong growth seen in Q4 2024. Both gross and operating margins are anticipated to improve compared to the previous year, reflecting TSMC's operational efficiency.

As a leader in cutting-edge process technologies, TSMC's work on 3nm and 5nm wafers plays a critical role in the development of artificial intelligence applications. These advanced manufacturing capabilities have helped TSMC secure a dominant 67% share of the global semiconductor foundry market (according to TrendForce), making it the go-to foundry for high-performance and energy-efficient chips used in smartphones, AI accelerators, and data centres.

Figure 1: Financial results expectations

What to watch for in TSMC's report

High-performance computing and smartphone chips remain the key revenue drivers for TSMC, accounting for 88% of net revenue in Q4 2024. These segments are likely to maintain their importance in the latest earnings report.

From a geographic perspective, North American customers contributed 75% of TSMC's revenue in the previous quarter. This heavy reliance on US clients makes the company particularly sensitive to US trade policies and tariff decisions.

The market will be closely watching research and development (R&D) expenses, expected to expand by 29% year-on-year. An expansion in growth will show TSMC's commitment to maintaining technological leadership in areas such as advanced node processes and chip packaging technologies.

The management's guidance for Q2 2025 will be another focal point, especially regarding revenue projections and margin expectations. Any adjustments to the full-year outlook could significantly impact market sentiment toward the semiconductor sector as a whole.

Figure 2: TSMC revenue breakdown by platform and geography

Trade tensions and risks ahead

The semiconductor industry faces substantial risks from trade policy uncertainty. Earlier this month, the US briefly imposed 32% reciprocal tariffs on Taiwan before suspending them. More concerning is the recent Trump administration probe into semiconductor imports, with warnings that sectoral tariffs could be implemented within one to two months.

Given TSMC's heavy reliance on North American customers, these potential tariffs pose a significant threat. While markets have partially priced in these risks, the scope and scale of future tariffs remain unclear, creating continued uncertainty for the company and its key customers.

Beyond tariffs, export restrictions amid rising US-China tensions could further limit demand for TSMC's products. These geopolitical factors add another layer of complexity to the company's operating environment.

To mitigate these risks, TSMC has committed an additional $100 billion investment in US manufacturing plants. This move aligns with the Trump administration's focus on increasing domestic AI manufacturing capacity and could help insulate the company from some trade barriers. There are also reports of a potential joint venture between TSMC and Intel, which would significantly deepen the company's ties with the US semiconductor ecosystem.

Analyst outlook and recommendations

Analyst sentiment on TSMC has remained relatively stable over the past two years. According to LSEG Data & Analytics, nine out of 18 analysts currently assign a 'strong buy' recommendation to TSMC's US-listed ADR, with eight 'buy' ratings and just one 'hold' recommendation.

TipRanks shows a similar bullish picture, with the majority of analysts rating TSMC as a 'buy'. Their Smart Score metrics further reinforce the positive outlook for the semiconductor giant heading into this earnings report.

The average one-year price target on LSEG from analysts stands at $226.74, suggesting a potential 44% increase from the 15 April 2025 closing price of $157.33. This optimistic outlook reflects confidence in TSMC's long-term growth prospects despite near-term trade uncertainties.

Figure 3: Wall street analyst estimates

Figure 4: TipRanks smart score charts

TSMC share price technical analysis

TSMC's share price has experienced significant volatility in 2025, dropping 40% from its record high of $226.40 on 24 January to the low point on 7 April. While there has been some recovery, the stock remains 31% below its peak.

The technical analysis chart shows that TSMC shares have been consolidating after the uptrend ended in January. Current price levels align broadly with the downward trend line, suggesting a critical juncture for the stock.

A better-than-expected earnings report could drive the share price toward the $182-184 range, which coincides with a recent peak and the 200-day simple moving average (SMA). This would represent a significant technical breakthrough if achieved.

Conversely, disappointing results could see the stock testing support near the recent low of $134. This level will be crucial to watch if the earnings fail to meet market expectations or if management guidance disappoints.

Figure 5: TSMC daily price chart