TSMC posts record profit for a sixth straight quarter, beating estimates on AI boom

Taiwan Semiconductor Manufacturing Co. on Thursday reported a record third-quarter profit that beat estimates, powered by an unrelenting global appetite for AI chips.

Here are TSMC’s third-quarter results against LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 1.49 trillion new Taiwan dollars ($46.36 billion) vs. NT$1.47 trillion
• Net Income: NT$763.1 billion vs. NT$746.34 billion expected

The world’s largest contract chipmaker posted a record net profit for a sixth straight quarter, reporting 68.7% surge in the reported quarter from a year earlier.

TSMC’s third-quarter operating margin came in at 58.7%, exceeding the upper end of its guidance range of 58%, showcasing the pricing power enjoyed by the company as the AI boom fuels demand for semiconductors.

TSMC forecast fourth-quarter revenue between $52.3 billion and $54.3 billion, representing a 14% sequential increase and a 58% jump from a year earlier at the midpoint of its guidance range, according to the company’s earnings call.

The chipmaker expects its capital expenditure from 2026 to 2028 to be significantly higher than in the previous three years, as it continues to ramp up investments to support growing customer demand.

TSMC expects its fourth-quarter business to be supported by continued strong demand for its advanced chipmaking technologies, including the ramp-up of its 2-nanometer process.

Advanced technologies, defined as 7-nanometer and more advanced technologies, made up for 79% of total wafer revenue. The 3-nanometer chips accounted for the largest share of its revenue in the third quarter at 33%, followed by 5- and 7-nanometer chips.

By platform, high-performance computing accounted for the largest share of revenue at 68%, followed by smartphones at 21%. Meanwhile, automotive was the fastest-growing segment on a quarter-on-quarter basis, with 23%  growth rate.

TSMC said demand for AI chips remains strong, driven by the growing adoption of agentic AI and open-source AI models, which are expected to make AI more accessible and fuel demand for advanced semiconductors.

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

TSMC also pointed to rising demand for AI accelerators, processors used in agentic AI applications and networking, adding that semiconductors are set to play an increasingly important role in the global AI supply chain.

TSMC also said it had completed construction of its second fab in Arizona and is installing equipment, with mass production expected to begin in the third quarter of 2027, slightly ahead of its previous schedule.

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

The chipmaker is also reportedly considering expanding beyond Arizona, evaluating a potential investment in Texas as it looks to further strengthen its U.S. manufacturing presence.