TLDRs;
- TSMC shares jumped nearly 8% ahead of its Q3 earnings, fueled by strong AI chip demand.
- The Taiwan semiconductor giant expects record quarterly profit and continued revenue growth in Q3.
- Investors are closely watching TSMC’s packaging bottlenecks as AI-driven growth peaks in 2025.
- Expansion in Arizona and CoWoS production aims to sustain long-term AI market dominance.
Taiwan Semiconductor Manufacturing Company Limited (TSMC) saw its stock surge nearly 8% on Monday, reflecting investor enthusiasm ahead of its third-quarter earnings report scheduled for October 16.
Analysts are projecting a 28% increase in net profit to a record T$415.4 billion (US$13.6 billion), driven by soaring demand for AI chips.
The company’s performance has exceeded expectations this year, with Q3 revenue forecasted to climb 30%, marking TSMC’s seventh consecutive quarter of growth. Shares have already risen 30% in 2025, contributing to a 16.9% lift in Taiwan’s benchmark stock index. Market watchers note that TSMC’s partnership with tech giants such as Nvidia and Apple continues to strengthen its position in the global semiconductor supply chain.
AI Chips Fuel Record Profits
The AI chip boom has become a critical revenue driver for TSMC. High-performance accelerators, particularly multi-die GPUs, are creating unprecedented demand for the company’s advanced packaging technologies.
TSMC’s Chip-on-Wafer-on-Substrate (CoWoS) output is projected to reach 75,000 wafers per month in 2025, nearly double the 2024 levels. Nvidia has already booked over 70% of the larger CoWoS-L designs for next year, highlighting the strategic importance of TSMC’s manufacturing capabilities.
However, analysts caution that profit growth may face constraints due to packaging bottlenecks. While TSMC is accelerating CoWoS site expansion and reducing build times from three to five years down to 1.5–2 years, any delays in ramping up production could impact GPU shipments and overall earnings momentum.
Arizona Expansion Supports Long-Term Growth
TSMC is actively investing US$165 billion in new manufacturing facilities in Arizona, a move aimed at diversifying production and meeting rising global demand.
This expansion is part of TSMC’s long-term strategy to capitalize on AI and high-performance computing trends while reducing dependence on a single region.
Alongside Arizona, the company is working closely with outsourced semiconductor assembly and test (OSAT) partners such as ASE and Amkor to boost production lines. These initiatives are expected to sustain TSMC’s market leadership in AI chip manufacturing through 2026 and beyond.
Substrate Market Gains Investor Attention
Beyond TSMC, the broader semiconductor ecosystem is also benefiting from the AI boom. The Ajinomoto Build-up Film (ABF) substrate market, essential for servers and high-bandwidth memory (HBM), is projected to grow at a 16.3% CAGR through 2033.
Top substrate makers, including Unimicron and Ibiden, are expanding capacity to capture rising demand. This sector presents additional investment opportunities for those seeking AI exposure without relying solely on TSMC’s stock.
Investors are watching these developments closely, as substrate expansion and CoWoS production will determine whether TSMC can sustain its record profit trajectory amid growing global competition.
Looking Ahead
TSMC’s Q3 earnings report will be a critical milestone for investors, providing insight into how the world’s largest contract chipmaker is navigating AI-driven demand and production challenges.
With record profits expected, strategic investments in Arizona, and a focus on advanced packaging, TSMC remains at the forefront of the semiconductor revolution. However, the company’s ability to overcome supply bottlenecks will be essential to maintaining growth momentum and meeting the surging appetite for AI hardware.
