Taiwan Semiconductor Manufacturing Company (TSMC) reported a 54% increase in net profit in the third quarter, with net income reaching 325.3 billion Taiwanese dollars ($10.1 billion). The company also forecasted annual revenue growth for the last three months of the year, citing continued demand for chips driven by AI applications. TSMC is the world’s largest producer of advanced chips and serves clients such as Apple and Nvidia. The company’s net revenue for the third quarter was $23.5 billion, a 36% year-on-year increase, with a gross margin of 57.8%.
During an earnings call, TSMC’s Chief Financial Officer Wendell Huang stated that the company expects fourth-quarter revenue to be between $26.1 billion and $26.9 billion, representing a 13% sequential increase or a 35% year-over-year increase at the midpoint. TSMC attributed its strong performance in the third quarter to robust demand for its industry-leading 3nm and 5nm technologies in smartphones and AI-related applications. Chairman and CEO C.C. Wei emphasized the significant growth in AI demand for TSMC and its wide-ranging collaborations with AI innovators and hyperscalers.
TSMC’s shares on the Taipei stock exchange have surged nearly 80% year-to-date, outpacing the broader market gains. The company anticipates its capital expenditure for the year to be slightly higher than $30 billion. TSMC has been expanding its manufacturing presence globally, investing $65 billion in three chip plants in Arizona and opening its first factory in Japan. The Taiwanese chipmaker’s earnings beat comes as ASML, a supplier of machines to TSMC, issued a lower-than-expected forecast for net sales, causing a decrease in its shares.
While some market participants have raised concerns about the long-term sustainability of the AI boom and the returns on investments in the technology sector, TSMC remains optimistic about the future of AI. Young Liu, CEO and chairman of Apple supplier Foxconn, believes that the AI frenzy still has room to grow as advanced language models continue to evolve. TSMC’s strong performance and continued investments in manufacturing capacity highlight its position as a key player in the global semiconductor industry, driven by increasing demand for advanced chips in various applications.
