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Taiwan Semiconductor Manufacturing Company (TSMC) announced a significant increase in its third-quarter net profit, which rose nearly 70% to approximately NT$763 billion, surpassing analyst expectations. The surge in profit is attributed to the growing demand for chips used in artificial intelligence applications, with revenue reaching about $47 billion, exceeding the company's own guidance range. Despite these positive results, TSMC's shares experienced a decline as investors expressed concerns over margin guidance and the company's substantial capital expenditure plans.
The gross margin for the quarter was reported at about 66%, a notable increase from the previous year but a decrease from the second quarter, primarily due to the early ramp-up of its 2-nanometre production technology. High-performance computing, which includes AI accelerators, constituted 68% of TSMC's revenue, up from 57% a year earlier, highlighting the company's pivot towards AI-driven markets. TSMC's Chief Executive C.C. Wei indicated that demand for AI chips remains robust and is likely to exceed previous long-term growth forecasts.
For the fourth quarter, TSMC has projected revenue between $52 billion and $54 billion, with a gross margin expected to range from 65% to 67%. The company has also raised its full-year revenue growth outlook to approximately 44% in US dollar terms, an increase from earlier estimates. However, the anticipated heavy capital spending of $60 billion to $64 billion for 2026 and the potential impact of overseas factories on margins have contributed to a cautious market reaction, despite the overall positive outlook for the AI supply chain.
Source: KLEA News