TSMC 2025H2 Outlook: The Wafer King and the Battle to Defend Technological Supremacy in the AI Wave

⚙️ 1. Technological Barriers and Capacity Layout: The "Invisible Engine" of AI Computing Power
Monopoly in Advanced Processes
Dominant in Sub-3nm Processes: TSMC manufactures high-end GPUs for AI chip giants like NVIDIA and AMD, maintaining full capacity utilization. Blackwell architecture orders are scheduled until 2026, and Co-on-Woof-Structure (CoWoS) advanced packaging technology has become a scarce resource.
Risk of Technology Leaks: The leak of 2nm process secrets has sparked market concerns. If concerns about customer order rescheduling grow, this could undermine TSMC's pricing power.
Overseas Capacity Expansion Game
The Double-Edged Sword of US Factories: The Arizona fab has been granted tariff exemptions, but the shortage of local talent (over half of whom rely on expatriates) is driving up costs, making mass production progress crucial to recovering gross profit margins.
Geo-regional Alternatives: Accelerated construction of factories in Japan and Germany is diversifying supply chain risks, but the short-term impact is limited.

💡 II. AI Demand and Market Dynamics: Growth Momentum and Cyclical Pressures
The Definite Dividend of the AI Wave
The Computing Power Arms Race: Surging global AI spending is driving demand for high-bandwidth storage and GPUs. TSMC, as Nvidia's exclusive foundry, directly benefits from the explosion of AI servers and smart devices (such as AI PCs).
The New Blue Ocean of Sovereign AI: European and Middle Eastern countries are accelerating the deployment of domestic computing facilities, and customized chip orders are enhancing long-term growth visibility.
Consumer Electronics: The Drag and Signs of Recovery
The End of the Mobile Phone/PC Inventory Adjustment: Weak iPhone shipments are dragging down non-AI businesses, but Qualcomm and MediaTek's new AI mobile phone chip production has rebounded, and utilization rates are expected to improve in the second half of the year.
Increased Automotive Electronics: Orders for Tesla's Dojo chips and traditional automakers' intelligent driving platforms are filling mature process capacity.

⚠️ III. Geopolitical and Supply Chain Risks: Offense and Defense Under the Shadow of Tariffs
Tariff Policy Impact Chain
Lessons from the April Stock Market Crash: The US "Liberation Day" tariffs triggered a nearly 10% single-day plunge in the Taiwan stock market, with TSMC's ADR hitting its daily limit, reflecting the market's extreme sensitivity to policy.
Waiver Renewal Game: If the Arizona plant fails to meet the domestic procurement ratio target, it may face the risk of tariff retroactivity. The results of the US Department of Commerce review in September should be closely monitored.
Customer Concentration Risks
The top three customers (Nvidia, Apple, and Intel) contribute over 50% of revenue. If Intel's outsourcing strategy is scaled back or Apple expands its in-house chip production, growth expectations could be revised downward.

💰 IV. Institutional Trends and Market Sentiment: Consensus Amidst Fund Divergence
Long-term Capital Holds Firmly
The proportion of major shareholders holding more than 400 shares remained stable at 89%. Institutional funds such as ARK Fund increased their holdings in Q2, bucking the trend, betting on the irreplaceable nature of AI foundry services. The options market is accumulating bullish contracts: Strike prices for January 2026 expiration are concentrated at significantly high levels, suggesting that large funds are betting on technological breakthroughs.
Short positions: Valuation and sentiment play a role.
ADR premium risks: The gap between US ADR prices and current Taiwan stock prices has reached a 16-year high, and arbitrage funds may trigger a short-term correction.
"AI bubble" concerns: If Q3 earnings reports show a weaker-than-expected recovery in non-AI businesses, high price-to-earnings ratios may be corrected.

📈 V. Second Half Trend Forecast: Three Scenarios and Observation Points
Scenario Trigger Condition Stock Price Path
Bull Breakout (50%): AI orders increase by over 15% month-over-month; US factories reach mass production targets, breaking through previous highs, shifting valuations toward "computing infrastructure leader"
Volatile Digestion (40%): Weak consumer electronics demand continues; pending tariff exemption extension, consolidation at high levels, awaiting 2nm mass production verification in 2026
Deep Pullback (10%): The technology leak scandal triggers customer order shifts; global semiconductor capital expenditure cuts lead to a retracement to the early 2020 platform, shrinking premiums
Key Observation Points:
August Board Meeting: Response Plan for the Technology Leak Case and US Factory Progress; Biya is a very convenient and user-friendly tool, prominent in the US and Hong Kong stock markets. It allows for more information, eliminating the need for multiple platforms, making it very convenient and practical
October Q3 Market Update: AI order share, automotive electronics recovery progress, 2nm yield data
November Geopolitical Window: Post-US election tariff policy trends, Arizona factory subsidies implemented

💎 Conclusion: Finding an Anchor in the Fog of Technological Hegemony and Geopolitical Confusion
TSMC's core conflict in the second half of 2025 lies in the fact that Biya remains highly effective.
"AI demand pushes up the valuation ceiling, while geopolitical risks suppress the profit floor."
Strategic Implications:
Breakthrough Signal: If AI revenue share exceeds 45% and US fab yields meet standards, the technology narrative will drive valuation restructuring.
Risk Hedging: Be wary of volatility amplified by recurring tariff policies and excessive customer concentration. Consider semiconductor equipment ETFs for risk diversification.
Ultimate Observation Point: 2nm mass production progress and sovereign AI order share—their resonance will define the next growth cycle.