Taiwan Semiconductor Manufacturing Co. (TSMC) posted a 39.6% year-on-year revenue increase in May 2025, totaling NT$320.5 billion (US$10.7 billion), despite an 8.3% drop from April 2025.

The growth was driven by chip stockpiling as clients brace for ongoing trade uncertainties.

April 2025 saw a 48% revenue surge, with analysts expecting TSMC’s second-quarter sales to climb 39%.

CEO C.C. Wei projected mid-20% sales growth in US dollar terms for 2025, driven by strong AI chip demand.

Nvidia also forecast strong sales, while Taiwan’s overall exports, including to the US, hit a record in May 2025.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Pre-tariff stockpiling follows historical pattern of trade uncertainty

TSMC’s 39.6% May revenue jump reflects a broader industry response to trade tensions, similar to patterns seen earlier in 2025.

In March, global semiconductor sales surged to $55.9 billion, representing a 19% year-over-year increase that analysts attributed directly to pre-tariff stockpiling behaviors by manufacturers 1.

This acceleration in purchasing has been particularly pronounced for memory chips and analog ICs, as OEMs and contract manufacturers attempt to secure inventory before potential trade restrictions take effect 1.

The semiconductor supply chain’s vulnerability to geopolitical shifts has created a climate where stockpiling becomes a strategic necessity. However, analysts caution that such growth may not reflect genuine end-market demand but rather defensive procurement strategies 2.

Companies throughout the electronics supply chain have faced extended semiconductor lead times of 4+ months alongside approximately 18% year-over-year price increases, further incentivizing stockpiling behaviors 2.

2️⃣ AI computing creates unprecedented demand concentration in high-performance chips

The AI boom driving TSMC’s growth represents a fundamental shift in semiconductor industry dynamics, with demand concentrated in specific high-performance segments.

Industry projections indicate generative AI chips alone will generate over $150 billion in sales by 2025, explaining why TSMC’s CEO maintains that AI chip demand still outstrips supply despite overall industry expansion 3.

TSMC’s profit margin of 41.69% and ROE of 31.64% significantly outperform industry averages, highlighting how the company’s advanced manufacturing capabilities position it to capture premium pricing in the AI chip market 4.

This concentrated demand for high-performance computing chips creates a bifurcation in the semiconductor market. KPMG’s survey shows that 92% of semiconductor leaders expect revenue growth in 2025 despite forecasts of stagnant growth in mature segments like PCs and smartphones 5, 6.

The sustained growth in data center and AI applications explains why the semiconductor industry is projected to reach $697 billion in 2025, representing an 11.2% overall growth rate despite mixed performance across different market segments 7.

3️⃣ Supply chain regionalization creates operational complexity for chipmakers

TSMC’s performance reflects the increasing complexity of navigating a semiconductor market that’s fragmenting along geopolitical lines.

The Americas region saw semiconductor sales spike by 45.3% year-over-year in Q1 2025, compared to more modest growth in Asia Pacific and an actual decline of 2.0% in Europe. This demonstrates how geopolitical factors are reshaping regional demand patterns 8.

Recent policy shifts affecting the flow of chips to and from China directly impact TSMC’s operations, with analysts noting these changes as a significant factor in the company’s stock outperforming some competitors 9.

Capital expenditures across the semiconductor industry are projected to reach $185 billion in 2025, much of it directed toward building manufacturing capacity in new geographies as companies respond to pressures for supply chain diversification 10.

This regionalization trend presents both challenges and opportunities for TSMC, which must balance its dominant manufacturing position in Taiwan against increasing pressure to establish manufacturing presence in markets like the United States, Europe, and Japan.

Recent TSMC developments

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