TSMC (Taiwan Semiconductor Manufacturing Company) is the world’s largest company that manufactures computer chips for other brands. It earns the highest-ever profit in a single quarter. There is a huge demand for advanced TSMC AI chips or next-generation semiconductors, which are used in everything from smartphones to data centers. But even though profits are rising, experts and investors are worried about two main things:
Old U.S. tariffs from the time when Donald Trump was president are still in place, which makes doing business more expensive. Currency fluctuations, changes in the value of the Taiwanese dollar compared to the U.S. dollar, could affect how much money TSMC makes.
AI Chip demand driving record TSMC earnings
Analysts believe that TSMC’s profit for the second quarter of 2025 will be more than 25% higher compared to the same year. Here is the reason:
More expanding orders for advanced chips (3nm and 5nm) from big tech companies like Apple, NVIDIA, and AMD. These chips are used in AI systems and other powerful tech.
The Smartphone market is doing well, especially with early production of Apple’s new iPhone 16, which is helping boost sales. High performance chips used in cloud servers and self-driving cars are also in high demand.
TSMC has kept increasing its production, despite the global economy being uncertain. It takes full advantage of the growing AI trend that is changing the chip industry in a major way.
Trump-Era tariffs pose a renewed threat
With the U.S. presidential election coming up, there is a chance that Donald Trump could become president again. This has raised concerns that he might bring back or increase trade tariffs.
Experts say if that happens, it could cause several problems:
Chip supply chains around the world could get disrupted, which is making it hard to move parts and products smoothly.
TSMC might have to pay more to export chips to the U.S. or buy special machines needed for chip-making.
It could make business more difficult with TSMC’s Chinese clients, and it is possible to slow down orders and deliveries.
In the past, TSMC mostly stayed safe from these tariffs. But this time, if the new rules target advanced chips, the situation could become more serious for the company.
Foreign Exchange (Forex) Fluctuations
Another thing that could affect TSMC’s profits is foreign exchange. Basically, how much one country’s money is worth compared to another. The Taiwanese dollar (NT$) has become stronger compared to the Japanese yen and South Korean won. This makes TSMC’s exports more expensive, which can hurt its ability to compete.
TSMC earns most of its money in U.S. dollars but it pays many of its bills (like salaries and utilities) in New Taiwan dollars.
So if the NT$ gets stronger, the profit shrinks when they change U.S. dollars back to NT$ for accounting. Analysts say that even a small change of 1–2% in exchange rates can significantly affect TSMC’s quarterly profit.
Why TSMC’s Performance Matters Globally
TSMC is not just a chipmaker. It empowers everything from smartphones to AI to autonomous vehicles. Its financial performance is a barometer for the entire semiconductor industry. It’s result impacts:
– Stock performance of major clients like Apple and NVIDIA
– Semiconductor equipment suppliers across the U.S., Japan, and the EU
– Broader market sentiment around AI growth and chip supply chains
Final thoughts:
TSMC is expected to report record-breaking profits in Q2 2025, thanks to strong demand for AI chips. But the company also faces risks from global politics and economic changes. A possible trade war with China and shifting currency values could affect its business. So while growth is strong, challenges still remain. Investors should be ready for both ups and downs. TSMC’s future remains bright, but it is navigating through a complex and shifting global landscape.
