TSMC is hosting our earnings conference call via live audio webcast through the company's website at www.tsmc.com, where you can also download the earnings release materials. Wendell Huang, will summarize our operations in the third quarter 2025, followed by our guidance for the fourth quarter 2025. Wendell Huang, for the summary of operations and the current quarter guidance. After that, I will provide the guidance for the fourth quarter 2025.
Third quarter revenue increased 6% sequentially in NT, as our business was supported by a strong demand for our leading-edge process technologies. dollar terms, revenue increased 10.1% sequentially to $33.1 billion, slightly ahead of our third quarter guidance. Overall, our third quarter EPS was TWD 17.44, up 39% year-over-year, and ROE was 37.8%. 3 nm process technology contributed 23% of wafer revenue in the third quarter, while 5 nm and 7 nm accounted for 37% and 14% respectively.
Advanced Technologies defined as 7 nm and below accounted for 74% of wafer revenue. Moving on to revenue contribution by platform, HPC remained flat quarter-over-quarter to account for 57% of our third quarter revenue. 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 $1 to TWD 30.6, gross margin is expected to be between 59% and 61%.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q4 2025 | $32.2B-$33.4B (-1% QoQ / +22% YoY at midpoint) |
| Gross margin | Q4 2025 | 59%-61% (+50 bps at midpoint) |
| Operating margin | Q4 2025 | 49%-51% |
| Full-year revenue growth | FY 2025 | close to mid-30% (USD) (raised) |
| Capital budget | FY 2025 | $40B-$42B (range narrowed upward) |
| Overseas fab margin dilution | FY 2025 | 1%-2% (improved) |
| Metric | YoY | Note |
|---|---|---|
| EPS | +39% | Reached TWD 17.44 on strong leading-edge demand and operating leverage. |
| Revenue | — | Up 10.1% sequentially in USD to $33.1B on leading-edge demand; explicit YoY not given, but Q4 guided +22% YoY at midpoint. |
| Gross margin | — | Rose 90 bps sequentially to 59.5% on cost improvement and higher utilization, partially offset by overseas dilution and unfavorable FX. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI demand | Robust; mid-40s% AI accelerator CAGR (2024-2029) | Stronger than three months ago; tracking a little above mid-40s%, with an update promised in January | Increasing |
| CapEx | $38B-$42B for 2025 | Narrowed to $40B-$42B; higher CapEx correlated with higher future growth | Increasing |
| N2 / A16 ramp | On track | N2 volume production later this quarter with good yield, faster ramp in 2026; N2P and A16 in H2 2026 | Increasing |
| Arizona / overseas expansion | Speeding up Arizona | Close to securing a second land parcel; upgrading Arizona to more advanced nodes faster on AI demand | Expanding |
| Gross margin / FX | 58.6% in Q2 with FX headwind | 59.5%, beat guidance on favorable actual FX; each 1% FX move affects margin ~40 bps | Improving |
| Non-AI recovery / tariffs | Mild non-AI recovery | Non-AI bottomed and in mild recovery; tariff and consumer price-sensitivity risks into 2026 | Mixed |