TSMC Q325. Today, The Numbers Are Insane

on track for $122 billion in annual revenues this year and likely $150 billion in 2026

TSMC last week announced Q3 2025 revenues of $33.1 billion, slightly exceeding the upper end of the guided range, up 10.1% QoQ and up 40.8% YoY. This represented the company’s highest ever quarterly revenue and was roughly double what the company earned in the same quarter just four years ago.

Net income amounted to NT$452.30 billion, up 39% YoY, while gross margin came in at 59.5%, exceeding the upper end of the guided range by a full two points. Why? According to the prepared remarks:

Gross margin increased 0.9 percentage points sequentially to 59.5%, primarily due to cost improvement efforts and a higher capacity utilization rate, partially offset by an unfavorable foreign exchange rate and dilution from our overseas fabs

Looking ahead, the company forecasted current quarter revenues of $32.8 billion at the midpoint, with gross margin set to increase a further 50 basis points.

Based on the current business outlook, we expect our fourth quarter revenue to be between $32.2 billion and $33.4 billion, which represents a 1% sequential decrease or a 22% year-over-year increase at the midpoint. Based on the exchange rate assumption of USD1 to TWD30.6, gross margin is expected to be between 59% and 61%, operating margin between 49% and 51%.

Given this forecast for the fourth quarter, TSMC was obliged to update their full year outlook as follows:

Supported by our strong technology differentiation and broad customer base, we now expect our full year 2025 revenue to increase by close to mid-30s percent year-over-year in US dollar term.

For the record, this compares with their forecast last quarter for a YoY revenue increase of 30%.

There was also an update on the planned CapEx for full year 2025.

As the structural AI-related demand continues to be very strong, we continue to invest to support our customers’ growth. We are narrowing the range of our 2025 CapEx to be between $40 billion and $42 billion as compared to $38 billion to $42 billion previously

Thus far this year, TSMC has spent $29.4 billion on CapEx

The Q&A session was dominated by analysts trying to gauge what the company’s CapEx plans were for the coming year, presumably in light of the current insatiable demand for high performance compute. It was against this backdrop that CEO C.C Wei made the comment about the numbers being insane. What exactly did he mean and furthermore, why was there no sequential increase to be seen in the current quarter forecast? After all, Q424 saw a 15.5% QoQ increase and this followed a 13.5% QoQ increase in Q423. Let’s dig in…