TSMC Achieves Sixth Consecutive Quarter of Record Profit Amid AI-Driven Demand

Taiwan Semiconductor Manufacturing Co. on Thursday announced a record third‑quarter profit that surpassed forecasts, driven by relentless global demand for AI chips.

Below are TSMC’s third‑quarter figures compared with LSEG SmartEstimates, which prioritize the forecasts of analysts with the strongest track records.

• Revenue reached NT$1.49 trillion (approximately US$46.36 billion), compared with the estimate of NT$1.47 trillion.
• Net income amounted to NT$763.1 billion, exceeding the expected NT$746.34 billion.

As the world’s largest contract chipmaker, TSMC recorded a sixth consecutive quarter of record net profit, reflecting a 68.7% year‑over‑year increase.

TSMC’s third‑quarter operating margin came in at 58.7%, topping the high end of its 58% guidance range and highlighting the pricing power it derives from the AI‑driven surge in semiconductor demand.

TSMC projected fourth‑quarter revenue between US$52.3 billion and US$54.3 billion, which translates to a 14% sequential rise and a 58% year‑over‑year increase at the midpoint of its guidance, the company said on its earnings call.

The chipmaker anticipates that capital spending from 2026 through 2028 will be markedly higher than in the prior three years, as it steps up investment to meet rising customer demand.

TSMC’s better‑than‑expected results and raised full‑year revenue outlook highlight that demand for advanced chips continues to exceed production capacity, with the firm’s heightened capital spending reflecting confidence in sustained growth, said Sravan Kundojjala, an analyst at SemiAnalysis, in an email to CNBC.

TSMC anticipates that its fourth‑quarter performance will be bolstered by ongoing strong demand for its advanced chipmaking technologies, including the rollout of its 2‑nanometer process.

Kundojjala also emphasized TSMC’s cautious approach to capacity expansion, noting that the company is evaluating whether customers possess the financing and supporting components required to deploy AI systems.

“Even after those checks, TSMC says demand still outstrips supply,” he said, adding that this reinforces confidence in the AI buildout while ensuring investment decisions reflect customers’ ability to deploy the chips they order.

Advanced technologies—defined as 7‑nanometer and finer processes—accounted for 79% of TSMC’s total wafer revenue in the quarter. The 3‑nanometer chips contributed the largest share at 33%, followed by 5‑nanometer and 7‑nanometer devices.

By platform, high‑performance computing generated the biggest share of revenue at 68%, with smartphones at 21%. Automotive emerged as the fastest‑growing segment on a quarter‑over‑quarter basis, posting a 23% increase.

TSMC said demand for AI chips remains robust, driven by the rising adoption of agentic AI and open‑source AI models, which are expected to broaden access to AI and spur demand for advanced semiconductors.

The company’s free cash flow jumped to NT$476.56 billion in the third quarter, up from NT$139.38 billion a year earlier.

TSMC also highlighted growing demand for AI accelerators—processors used in agentic AI applications and networking—and noted that semiconductors are set to become an increasingly vital part of the global AI supply chain.

TSMC also said it has finished building its second fab in Arizona and is installing equipment, with mass production slated to start in the third quarter of 2027, slightly earlier than originally planned.

The TSMC board approved a NT$7.00 cash dividend for the second quarter. In its July second‑quarter earnings announcement, the company outlined plans to expand its U.S. manufacturing footprint, including a total planned investment of $265 billion in Arizona.

The chipmaker is also reportedly evaluating a potential investment in Texas as it seeks to broaden its U.S. manufacturing presence beyond Arizona.

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