TSMC Posts Record Third-Quarter Profit of $23.6 Billion as AI Chip Demand Keeps Surging
TSMC's net profit rose 68.7% to NT$763.06 billion in the third quarter, a sixth straight record, as AI chip orders pushed high-performance computing to 68% of revenue.
TAIPEI, Taiwan — Taiwan Semiconductor Manufacturing Co. reported record third-quarter results Thursday, with net profit climbing 68.7% from a year earlier to NT$763.06 billion (about $23.6 billion) on sustained demand for chips used in artificial intelligence systems.
Revenue reached NT$1.494 trillion (about $46.72 billion), up 50.9% from a year earlier and 17.6% from the second quarter. The revenue total beat the company’s own guidance of $44.6 billion to $45.8 billion, while net profit came in above the NT$746.3 billion consensus estimate compiled by LSEG. Earnings per share rose 68.7% to NT$29.43, according to Reuters reporting carried by the Seoul Economic Daily. It was the sixth consecutive quarter in which TSMC set a record for quarterly net profit.
AI orders drive the record
High-performance computing accounted for 68% of third-quarter revenue, up from 57% a year earlier, reflecting rising orders for AI chips from major customers including Nvidia. Revenue from the segment grew 22% from the previous quarter, far ahead of the 10% increase in the smartphone segment, which made up 21% of total revenue.
The most advanced manufacturing processes also contributed more. The 2-nanometer process accounted for 8% of wafer revenue, up from 3% in the previous quarter, while 3-nanometer made up 33%, 5-nanometer 28% and 7-nanometer 10%. Advanced processes of 7 nanometers and below together accounted for 79% of revenue, up from 74% a year earlier.
Margins slip as spending climbs
Profitability improved from a year earlier but slipped from the previous quarter. Gross margin was 66.4%, up from 59.5% a year earlier but down 1.3 percentage points from 67.7% in the second quarter, which TSMC attributed to costs tied to the early ramp-up of its 2-nanometer process. Operating margin fell to 58.7% from 60.3% in the previous quarter.
The company spent about $13.84 billion in capital expenditure in the third quarter, bringing the total for the first nine months of the year to $40.64 billion. TSMC has raised its full-year 2026 capital expenditure guidance to between $60 billion and $64 billion, mostly to expand capacity for advanced process technologies and AI-related production. Its total investment commitments in the United States amount to $265 billion, centered on expanding chip production facilities in Arizona, the Seoul Economic Daily reported.
The record results arrived as concerns have grown in equity markets over the high valuations of AI-related technology stocks and the pace of their capital spending, with wider market volatility tied to the outlook for U.S. interest rates.
Reporting based on coverage by Reuters via the Seoul Economic Daily and TradingKey.
