All eyes are on TSMC ahead of its July 16 Q2 earnings, with investors watching whether the AI boom can drive another earnings beat. Commercial Times, citing analysts, says AI demand is expected to push both revenue and gross margin above guidance, with gross margin potentially nearing 70%.

The upbeat outlook is underpinned by sustained high utilization of 3nm and 5nm capacity, alongside a richer mix of AI GPU-driven advanced-node wafers and advanced packaging, the report adds. Analysts believe these tailwinds could push TSMC’s second-quarter gross margin beyond the upper end of its 67.5% guidance, bringing the 70% milestone within reach.

It is also worth noting that demand momentum is extending into next-generation nodes, with strong interest building for TSMC’s 2nm-class process in the second half. The company’s N2P variant, featuring an enhanced nanosheet architecture, is expected to enter mass production in 2026 H2, underscoring continued strength in advanced-node adoption, according to a separate Commercial Times report.

As reported by Wccftech, TSMC’s N2 is expected to power the upcoming A20 and A20 Pro chips, while the A20 Pro is also reported to adopt the new WMCM (Wafer-Level Multi-Chip Module) packaging, marking a shift away from the PoP (Package-on-Package) architecture used in the A19 Pro. On the other hand, both Qualcomm and MediaTek are expected to build their next-generation flagship mobile processors on N2P, Commercial Times adds.

3Q Revenue Poised for Fresh High

Meanwhile, with combined April-May revenue already reaching NT$827.7 billion, analysts cited by the report estimate TSMC’s June revenue could approach NT$440 billion, putting second-quarter revenue on track to exceed the upper end of the company’s guidance. According to TSMC, it guided second-quarter revenue to between US$39 billion and US$40.2 billion, based on an exchange rate of NT$31.7 to the U.S. dollar.

Notably, the report suggests that TSMC’s strong momentum is expected to carry into the third quarter, with U.S.-dollar revenue projected to grow more than 10% sequentially, pointing to yet another record-high quarter.

The growth outlook, according to Commercial Times, is underpinned by strong demand from NVIDIA’s next-generation AI GPUs, expanding AI ASIC deployments from AMD and cloud service providers (CSPs), alongside seasonal smartphone inventory builds. Against this backdrop, analysts reportedly see full-year growth potentially exceeding TSMC’s prior guidance of more than 30%.

The market is also closely watching TSMC’s advanced packaging expansion. Supply chain sources cited by Commercial Times indicate construction at the company’s Chiayi AP7 site has progressed from Phase 1 and Phase 2 toward Phase 3. Meanwhile, the report notes that the foundation work for the AP7 Phase 3 facility began in the second quarter, with the necessary construction permits recently secured.

According to Commercial Times, the site is positioned as a key hub for the company’s 3DFabric roadmap, including CoWoS, WMCM and SoIC, as overall CoWoS capacity is projected to rise from about 140,000 wafers per month this year to roughly 170,000 by 2027 as AP7 and AP8 ramp.

Read more

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(Photo credit: TSMC)