The key message from TSMC’s third quarter 2025 earnings call emphasized the overwhelming and accelerating nature of AI-related demand, which is driving the company's strong financial performance and aggressive investment strategy. TSMC reported that its Q3 revenue of USD33.1 billion slightly exceeded guidance, supported by strong demand for leading-edge process technologies, leading to a sequential increase in gross margin to 59.5%. The outlook for AI remains extremely positive, with customers requesting capacity, and management noting that the structural increase in long-term market demand means that the previously forecasted mid-40s percent CAGR for AI accelerators is likely to be "a little bit better," calling the current demand numbers "insane". In response, TSMC is increasing its 2025 CapEx, narrowing the range to USD40 billion to USD42 billion, with 70% dedicated to advanced process technologies, confirming that higher CapEx correlates with future growth opportunities. Furthermore, capacity for advanced packaging like CoWoS is "very tight," prompting significant expansion efforts, and the company is preparing for a faster ramp of its 2-nanometer (N2) technology in 2026, fueled by both smartphone and HPC AI applications. TSMC is also rapidly expanding its global footprint, accelerating N2 technology upgrades in Arizona and proceeding with construction in Japan and Germany, while continuing investments in Taiwan to serve as the trusted capacity provider for the global logic IC industry.
