(The Turkish Post) – TSMC profit rose 68.7% from a year earlier to a record 763.1 billion New Taiwan dollars, about $23.5 billion, in the third quarter as demand for AI chips kept growing, Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, said on Oct. 15.
The TSMC profit figure beat analyst estimates of 739.5 billion Taiwan dollars and was the company’s sixth consecutive quarter of record earnings. The company makes the most advanced processors for Nvidia, Apple and other technology groups, so its results are watched as a gauge of spending on AI hardware.
TSMC profit and revenue in the third quarter
Revenue for July to September rose 50.9% from a year earlier to about 1.5 trillion Taiwan dollars. In U.S. dollar terms, revenue was about $46.7 billion, up 16.2% from the previous quarter and above the top of the company’s own guidance and the $45.41 billion analysts had expected. The TSMC profit and revenue figures were both company records. The previous profit record, 706.6 billion Taiwan dollars, was set in the April to June quarter.
2-nanometer ramp weighs on margins
Gross margin was 66.4%, down 1.3 percentage points from the second quarter, mainly because of the cost of starting production on the company’s 2-nanometer technology. Operating margin was 58.7%, slightly above the company’s guidance. Earnings per share were 29.43 Taiwan dollars, or $4.60 per American depositary receipt, above the $4.42 analysts had forecast.
High-performance computing, which includes AI accelerators, made up 68% of revenue, and smartphones 21%. Chips made on the 3-nanometer process accounted for 33% of wafer revenue, the largest share, and the newer 2-nanometer process for 8%. Automotive was the fastest-growing segment, with revenue up 23% from the previous quarter.
TSMC raises growth outlook on demand for AI chips
For the fourth quarter, TSMC expects revenue of $52.3 billion to $54.3 billion, with a gross margin of 65% to 67% and an operating margin of 56.5% to 58.5%. The company said it expects full-year 2026 revenue to grow by about 44% in U.S. dollar terms, and it kept its 2026 capital spending budget at $60 billion to $64 billion.
Chairman and Chief Executive C.C. Wei said demand for the company’s chips remained strong. “We did not see any sign of slowdown,” he told analysts on the earnings call. TSMC had forecast that its revenue from AI accelerators would grow at a compound annual rate in the mid-to-high 50s percent from 2024 to 2029. Wei did not give a new figure but said it “probably will be higher.” He also said that “there is no ceiling for TSMC’s profitability, but a dramatic increase will not happen overnight either.”
Chief Financial Officer Wendell Huang said rising prices for chipmaking equipment were adding to costs. “The tool price inflation is real,” he said.
Free cash flow for the quarter was $14.7 billion, up from $4.3 billion a year earlier.
TSMC expansion in Arizona and Japan
TSMC is expanding production outside Taiwan as governments seek supplies of advanced chips closer to home. The company announced in July a plan to raise its total investment in Arizona to $265 billion. Its second Arizona fab is scheduled to begin volume production in the third quarter of 2027, and a plant in Japan is set to start making 3-nanometer chips in 2028, the company said.
Executives said costs at overseas plants, together with the 2-nanometer ramp, would weigh on margins in the coming quarters.
Chip stocks fall despite the TSMC profit record
TSMC shares fell 2.2% in Taipei before the results were released and stayed lower afterward. Technology stocks across Asia fell on Oct. 15, and trading in some South Korean shares was briefly halted after U.S. inflation data and concerns about the cost of the AI investment boom weighed on markets.
TSMC is Taiwan’s most valuable company and the largest stock on the Taiwan Stock Exchange.
