Taiwan Semiconductor (TSM) Earnings Thursday: Nvidia/Apple Demand, Advanced Packaging, Outlook, and Trade Ideas
Taiwan Semiconductor (TSM) Earnings Thursday: Nvidia/Apple Demand, Advanced Packaging, Outlook, and Trade Ideas
By:Gus Downing
TSMC is set to report their Q4 FY2025 earnings on Thursday, January 15, at 1:00AM EST.
Analyst consensus estimates call for an earnings per share (EPS) of $2.89 on revenue of $33 billion.
December sales have already been announced and indicate Q4 revenue is up 20% year-over-year.
Recent previews emphasize robust AI orders and a possible FY2026 growth guide of 25-30%.
Nvidia/Apple/AMD: The Demand Check
AI demand is obviously the driving factor in TSM’s growth. The company pre-annonced Q4 sales beat was tied to AI accelerators and advanced nodes. Any further information on order visibility for the first half of the 2026 fiscal year, High Bandwidth Memory (HBM) packaging bottlenecks, and hyperscaler ramps will set the tone. Additionally, any information on customer mix - particularly the major players, like Nvidia, Apple, AMD, and Qualcomm - would be a bonus.
CoWoS: From Bottleneck to Scale
Demand exceeding supply has been a prevalent issue, and throughout all of FY2024 and FY2025, packaging was the primary constraint on TSMC. Industry tracking projects the company’s Chip-on-Wafer-on-Substrate (CoWoS) output at 75,000-80,000 wafers per month for the final quarter of FY2025, with a target of 120,000-130,000 wafers per month in FY2026 as new production lines come online.
TSMC has two such new production lines already confirmed to open in FY2026; Advanced Packaging Plant 7 in Chiayi, Taiwan, and Advanced Packaging Plant 8 in Tainan Science Park. Investors will be listening for any news on achieved run-rates and cycle-time improvements.
Advanced Nodes: Yields, Costs, and Mix
Like the packaging constraint, new constraints are also brought about whenever new advanced nodes are developed. Reports suggest that the company’s N3 monthly capacity has surpassed 150,000 wafers per month; any data on N3 cost savings, yield learning, and the timing of increased N2 production will feed margin and Average Selling Price (ASP) models, with the propensity to move share price.
Gross Margin Guardrails vs. Reality
Investors will also have their eyes and ears open for any framing on gross margin, with Q4 trackers pointing to the 59-61% range outlined by the company in Q3. Any commentary on overseas dilution from Arizona and Japan would also be big. The market is currently pricing in a 1-3% dilution, with the mix shift to advanced nodes acting as a counterweight; if the actual dilution numbers stray from these expectations, share price could be impacted.
Capex Playbook: Where the Money Goes in 2026
All of the aforementioned expansion obviously costs a great deal, but TSMC actually narrowed their capital expenditure to $40-42 billion in FY2025, with heavy bias to advanced nodes and packaging. Investors are eager to hear the amount that is planned for 2026 and where it will be spent. Amkor, their U.S. packaging partner, and their Arizona campus will almost certainly be a part of the end-to-end plan.
JASM, ESMC, Arizona: Timelines That Matter
TSMC’s forays into international markets to streamline production have been a focal point for the company for some time, particularly their Japan Advanced Semiconductor Manufacturing (JASM) facility in Kumamoto, Japan, their European fabrication plant in Dresden, Germany, and their massive fabrication campus in North Phoenix, Arizona. Any updates on the status or timelines of any of these three facilities will frame medium-term supply and could move shares.
Guiding 25–30%: Stretch or Sandbag?
Looking ahead, guidance in the 25-30% range for revenue growth is expected; if guidance is issued higher, shares could move up in the near-term, and vice versa. It is also possible that management takes a more conservative approach on this call with the mentality of raising targets throughout the year as capacity and timelines become more certain.
If you're looking for a trade idea for TSM, check out this one from our very own Jenny Andrews!
Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
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