--- title: "TSMC (Minutes): 30% of 2nm production capacity will be in US factories in the future" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/28999494.md" description: "TSMC (TSMC) released its Q1 2025 earnings report (as of March 2025) during US pre-market hours on April 17, 2025, Beijing time. Below is the earnings call Minutes for TSMC's Q1 2025. For a Quick Interpretation of the earnings report, please refer to "Tariff Chaos Can't Shake 'Explosive' Guidance—Is TSMC Sitting Pretty?" I. $Taiwan Semiconductor(TSM.US) Key Earnings Highlights 1. Revenue Overview (1) Q1 2025 Revenue: Down 3.4% QoQ in NT dollars, down 5.1% in US dollars..." datetime: "2025-04-17T12:19:20.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/28999494.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/28999494.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/28999494.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # TSMC (Minutes): 30% of 2nm production capacity will be in US factories in the future TSMC (TSMC) released its Q1 2025 earnings report (as of March 2025) during US pre-market hours on April 17, 2025, Beijing time: Below are the earnings call minutes for TSMC's Q1 2025. For a detailed earnings analysis, please refer to [**"Tariff Chaos Can't Stop 'Explosive' Guidance—Is TSMC Sitting Pretty?"**](https://longportapp.cn/zh-CN/topics/28998340) **I.** $Taiwan Semiconductor(TSM.US) **Key Earnings Highlights** 1\. Revenue Overview (1) Q1 2025 revenue: Down 3.4% QoQ in NT$, down 5.1% in USD, mainly due to seasonal weakness in smartphone demand, partially offset by AI-related demand growth. Earthquake impacts also contributed, with revenue slightly above the midpoint of guidance. (2) Technology revenue breakdown: 3nm: 22% of wafer revenue 5nm: 36% of wafer revenue 7nm: 15% of wafer revenue Advanced tech (7nm and below): 73% of wafer revenue (3) Platform revenue breakdown: HPC: Up 7% QoQ, 59% of revenue Smartphones: Down 22% QoQ, 28% of revenue IoT: Down 9% QoQ, 5% of revenue Auto: Up 14% QoQ, 5% of revenue DCE: Up 8% QoQ, 1% of revenue 2\. Financial Metrics (1) Gross margin: 58.8%, down 0.2pp QoQ, **mainly impacted by earthquakes and overseas fab dilution**, partially offset by cost improvements. (2) OpEx: 10.2% of net revenue. (3) Operating margin: 48.5%, down 0.5pp QoQ. (4) EPS: NT$13.94. (5) ROE: 32.7%. 3\. Balance Sheet (1) Cash & equivalents: NT$2.7T (~$81B). (2) Current liabilities: Up NT$135B QoQ, mainly due to NT$111B increase in accrued liabilities (primarily income tax payable). (3) Financial ratios: DSO +1 day to 28 days; inventory days +3 to 83 days due to overseas fab expansion. 4\. Cash Flow & Capex (1) Operating cash flow: NT$626B. (2) Capex: NT$331B (~$10.06B). (3) Dividends: NT$104B paid for Q2 2024 cash dividend. (4) Bond issuance: Raised NT$16B cash. (5) Cash balance: Up NT$267B to NT$2.4T at quarter-end. 5\. Q2 2025 Guidance (1) Revenue: $28.4B-$29.2B, implying +13% QoQ/+38% YoY at midpoint. (2) Gross margin: 57%-59% (assuming USD/NTD at 32.5). (3) Operating margin: 47%-49%. (4) Tax rate: 20% in Q2; expected to normalize to 14%-15% in Q3/Q4; full-year rate 16%-17%. **II. TSMC Earnings Call Details** **2.1 Management Commentary** 1\. Profitability Outlook (2) Q1 gross margin: Slightly down 20bps QoQ to 58.8%, **with 60bps earthquake impact and Kumamoto fab dilution**, partially offset by cost controls. (2) Q2 gross margin: **Midpoint guidance implies 0.8% QoQ decline**, mainly from Arizona fab dilution. (3) Full-year margin dilution: **Overseas fabs to dilute margins by 2%-3%, expanding to 3%-4% in later years**. 2\. Capex & Expansion (1) 2025 capex budget: $38B-$42B, with 70% for advanced nodes, 10%-20% for specialty, 10%-20% for packaging/testing. (2) Arizona expansion: Additional $100B planned for 3 new fabs, advanced packaging, and R&D center. Total US investment to reach $165B. **(3) US fab progress:** Arizona Fab 1 entered volume production in Q4 2024 with yields matching Taiwan. **Fab 2 (3nm)** construction complete; accelerating production due to strong AI demand. **Fabs 3-4 (N2/A16)** to break ground this year pending permits. **Fabs 5-6** will use more advanced tech. 3\. Demand Trends (1) Foundry 2.0 growth: +10% YoY in 2025, matching IDC's 11% forecast. (2) AI demand: AI revenue to double in 2025. AI accelerators (GPUs/ASICs/HBM) driving strong growth; 45%+ CAGR expected post-2024. (3) Tariffs: No observed customer behavior changes; maintains ~25% USD revenue growth guidance. 4\. Global Expansion (1) Arizona: 3 new fabs (N2/A16) and 2 packaging facilities. **\~30% of ≤2nm capacity** will be US-based, creating standalone leading-edge cluster. (2) Japan/Europe: Kumamoto fab (specialty) began production in late 2024; Dresden on track. (3) Taiwan: Plans for 11 fabs and 4 packaging facilities with government support. 5\. Tech Updates N2/A16: N2 tape-outs exceeding N3/N5 levels, driven by smartphones/HPC; production starts H2 2025. A16 offers further PPA improvements; production starts H2 2026. **2.2 Q&A** **Q: CoWoS supply-demand outlook for 2026?** **A:** Still capacity-constrained despite recent improvements. Must double CoWoS capacity; expects better balance in 2026. **Q: Arizona expansion rationale and pricing?** **A:** Driven by US clients (Apple/NVIDIA/AMD/etc.). **\~30% of 2nm capacity** in Arizona. Pricing discussions ongoing to reflect geographic flexibility value. **Q: Geopolitical risk impact?** **A:** Already factored into guidance. **Q: Tariff sensitivity?** **A:** Monitoring closely but no customer changes yet. **Q: Mature node expansion plans?** **A:** No slowdown in Japan/Germany due to specialty demand. **Q: Tariff negotiations?** **A:** TSMC doesn't participate in government discussions. **Q: Q2 growth drivers?** **A:** Primarily 3nm/5nm HPC demand; maintains ~25% YoY guidance. **Q: Margin dilution factors?** **A:** Cost inflation and potential tariff impacts. **Q: US "fairness" definition?** **A:** Equal subsidy access for all. **Q: Arizona R&D focus?** **A:** Initial 1,000 engineers to support local operations; may expand to new nodes. **Q: Arizona timeline acceleration?** **A:** Fab 2 ahead by several quarters; Fab 3 timing depends on permits. **Q: Overseas pricing adjustments?** **A:** Ongoing discussions to reflect value. **Q: AI demand outside China?** **A:** Strong US demand supporting AI revenue doubling. **Q: Share buybacks?** **A:** Prefers sustainable dividend increases. **Q: Packaging tech roadmap?** **A:** SoIC adoption starting 2025; panel-level packaging in feasibility stage. **Q: Arizona 2nm capacity timeline?** **A:** ~30% of 2nm in Arizona; future nodes undecided. **Q: H2 visibility?** **A:** Too early to call; 2nm demand remains strong. **Q: Japan fab contribution?** **A:** 40K wafers/month at full ramp; immaterial to 2025 revenue. \ **Disclosures:** [**Dolphin Research Disclaimer**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [TSM.US](https://longbridge.com/en/quote/TSM.US.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**