TSMC reported record third-quarter net profit of $23.59 billion, up 69% from a year earlier, as artificial intelligence chip demand lifted earnings beyond analysts' forecasts. Key Points: TSM
TSMC reported record third-quarter net profit of $23.59 billion, up 69% from a year earlier, as artificial intelligence chip demand lifted earnings beyond analysts' forecasts.
Key Points:
- TSMC's $23.59 billion quarterly profit beat analysts' estimates and marked its sixth consecutive record quarter.
- Advanced manufacturing technology accounted for 79% of wafer revenue, while demand for AI chips remained strong.
- Management raised its 2026 revenue growth forecast to about 44% but warned of economic uncertainty heading into 2027.
Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, said Thursday its July-to-September profit reached 763.1 billion New Taiwan dollars, exceeding the 746.3 billion forecast in LSEG's SmartEstimate survey of 16 analysts, according to Reuters. That marked TSMC's sixth consecutive record quarter and its 11th straight quarter of earnings growth.
Revenue climbed 50.9% from a year earlier to NT$1.49 trillion, while third-quarter gross margin reached 66.4%, according to the company's quarterly earnings release. Chips made with its advanced processes accounted for 79% of wafer revenue, including an 8% share for new 2-nanometer technology.
TSMC supplies processors to Nvidia and Apple, making it a major chip supplier for AI systems and consumer electronics. Management expects fourth-quarter revenue of $52.3 billion to $54.3 billion, compared with $33.73 billion a year earlier, and maintained its $60 billion to $64 billion capital spending plan for 2026. TSMC also raised its full-year revenue growth estimate to about 44%, Reuters reported.
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Chief Executive C.C. Wei said demand still exceeds TSMC's production capacity, but warned that rising component costs and economic uncertainty are hurting price-sensitive markets. He said the company was "being prudent in our business planning going into 2027."
Gary Tan, a portfolio manager at Allspring Global Investments, told Reuters that the warning could lead analysts to cut profit forecasts throughout the chip supply chain.
He called the caution "sensible expectation management" rather than evidence of weakened long-term prospects. Analysts also see sustained demand for the company's advanced packaging technology, which helps combine complex chips for AI workloads.
Investors have not treated strong earnings as a guarantee of rising chip stocks. TSMC shares in Taipei closed 2% lower before the release as the broader technology sector fell amid fears that further U.S. interest rate increases could weigh on AI valuations. Shares of Samsung Electronics and SK Hynix dropped more than 10% during the selloff.
The latest quarter extends a run that began well before Thursday's report: TSMC posted a 50% increase in third-quarter revenue last week, while its shares have gained 57% so far in 2026. That track record underscores how far the company has advanced during the AI boom, even as the industry's longer-term spending outlook remains uncertain.
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