TSMC's Soaring Profits and the Future of GPU Pricing

Unpacking the Price Puzzle: TSMC's Success and Graphics Card Costs

TSMC's Remarkable Financial Performance

Taiwan Semiconductor Manufacturing Company (TSMC), a key player in the production of semiconductors for industry giants like Nvidia, AMD, and Intel, recently disclosed its financial results for the second quarter of 2025. The report highlights an astonishing profit of $13.53 billion from revenues exceeding $31 billion. This robust profitability significantly surpasses that of other tech firms, such as AMD, whose profits represent a much smaller fraction of their revenue. For instance, AMD's recent figures show profits at approximately one-tenth of its $7.4 billion revenue, while TSMC's profit margins are over one-third. This trend suggests TSMC is on track to achieve around $50 billion in profit for the year, propelled largely by the surging demand for AI-related hardware.

The Direct Impact on GPU Costs

While TSMC's substantial earnings are primarily linked to the boom in artificial intelligence, their success indirectly influences the pricing of PC graphics cards. Despite some recent price adjustments in the market, top-tier GPUs, such as Nvidia's 70 Ti-class cards, still command prices upwards of $700. A significant factor in this ongoing expense is the rising cost of wafers, the foundational material for computer chips.

Rising Wafer Prices: A Core Contributor to Expense

Insights from investment bank Morgan Stanley reveal a concerning upward trend in TSMC's wafer prices. The latest N3 wafers are estimated to cost approximately $25,000 each. This is a substantial increase compared to the $15,000 price tag for N5 wafers in 2023 and 2024, which are currently utilized in many of Nvidia's and AMD's contemporary GPUs. Projections suggest that the price for TSMC's advanced N2 node, which is just beginning to enter mass production and is expected to power Apple's next iPhone, could reach $30,000 per wafer. Although newer nodes like N3 offer greater transistor density, potentially yielding more powerful chips, the escalating production costs inevitably translate into higher retail prices for finished graphics cards. This escalating cost structure, combined with the strong profit margins maintained by TSMC and Nvidia, presents a challenging landscape for consumers seeking more affordable GPU options.