TSMC Expects Record Second-Quarter Profit Amid Trade Concerns

TAIPEI, Taiwan – Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading producer of advanced AI chips, is projected to report a staggering 52% increase in profit for the second quarter of 2023, thanks to a booming demand for artificial intelligence technologies.

Analysts from LSEG predict TSMC’s net profit will reach T$377.4 billion ($12.9 billion) for the period ending June 30. Mario Morales, a vice president at research firm IDC, emphasized that TSMC’s revenue could expand nearly 30% this year, outpacing the broader foundry industry’s growth of 17% to 18% this year.

TSMC has indicated this quarter’s anticipated profit would surpass T$374.68 billion, marking its highest quarterly earnings to date and its sixth consecutive quarter of profit growth. However, uncertainties linger surrounding the impact of U.S. tariffs introduced by President Donald Trump, as well as the appreciation of the Taiwan dollar.

In April, Trump threatened Taiwan with a 32% reciprocal tariff rate, although an updated figure has not yet surfaced. An increase in tariffs may indirectly push up prices and potentially dampen demand, according to TSMC’s assessments.

In conjunction with growing geopolitical tensions, the Taiwan dollar has risen 12% against the U.S. dollar this year, which could further strain TSMC’s margins. Dan Nystedt of TriOrient noted that TSMC typically sees a gross margin reduction of 0.4 percentage points for every 1% appreciation of the Taiwan dollar. For June alone, this appreciation has already cut more than 3 percentage points off their gross margin.

The company is set to present its earnings report on Thursday and will offer guidance for the third quarter during a press call at 0600 GMT. Despite a significant surge of around 80% in its stock value last year, TSMC shares have only increased by 3.7% so far this year due to ongoing concerns regarding tariffs and unfavorable currency exchanges.