Taiwan Semiconductor Manufacturing Co. on Thursday reported a record third-quarter profit that beat estimates, driven by a relentless global appetite for AI chips. Here are TSMC’s third-quarter results vs. LSEG SmartEstimates, which are weighted by analyst forecasts that are most consistently accurate: Revenue: NT$1.49 trillion ($46.36 billion) vs. NT$1.47 trillion Net revenue: NT$763.1 billion vs. NT$746.34 billion expected World’s largest contract chipmaker posted a record net profit for the sixth consecutive quarter, reporting a 68.7% increase in the reported quarter over the previous year. TSMC’s operating margin in the third quarter was 58.7%, beating the high end of its guidance range of 58%, demonstrating the pricing power the company enjoys as the AI boom drives 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 ago at the midpoint of its guidance range, according to the company’s earnings call. The chipmaker expects its capital spending from 2026 to 2028 to be significantly higher than the previous three years, as it continues to increase investments to support growing customer demand. TSMC’s better-than-expected results and improved full-year revenue outlook underscore how demand for advanced chips continues to outstrip its production capacity, and the company’s elevated capital spending reflects confidence in sustained growth in the coming years, said SemiAnalysis analyst Sravan Kundojjala. CNBC via email. TSMC expects its fourth-quarter business to be supported by continued strong demand for its advanced chip manufacturing technologies, including the acceleration of its 2-nanometer process. Kundojjala also highlighted TSMC’s careful approach to capacity expansion, adding that the chipmaker is evaluating whether customers have the financing and supporting components necessary to deploy AI systems. “Even after those checks, TSMC says demand remains well above its supply capacity,” he said, adding that it reinforces confidence in AI development while ensuring investment. The decisions reflect customers’ ability to implement the chips they request. Advanced technologies, defined as 7 nanometer and more advanced technologies, accounted for 79% of TSMC’s total wafer revenue in the report. 3-nanometer chips accounted for the majority 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, automobile was the fastest growing segment quarter-on-quarter, with a growth rate of 23%. TSMC said demand for AI chips remains strong, driven by the growing adoption of agent 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 increased to NT$476.56 billion in the third quarter, from NT$139.38 billion a year ago. TSMC also noted the growing demand for AI accelerators, processors used in agent AI applications and networks, adding that semiconductors will play an increasingly important role in the global AI supply chain. TSMC also said it had completed construction of its second factory 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’s board of directors approved a cash dividend of NT$7.00 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 possible investment in Texas as it looks to further strengthen its manufacturing presence in the United States.
