TSMC Reports Record Q3 Profit on Surging AI Chip Demand
TSMC reported a record third-quarter net profit of 763.1 billion new Taiwan dollars, surging 68.7% year-on-year amid insatiable global demand for AI chips and robust operating margins.
Taiwan Semiconductor Manufacturing Co. (TSMC) reported a record third-quarter profit that surpassed market expectations, driven by insatiable global demand for artificial intelligence chips. Company revenues also beat forecasts, coming in at 1.49 trillion new Taiwan dollars ($46.36 billion) compared to an estimated 1.47 trillion TWD.
Record Financial Growth and Margins
Net profit reached 763.1 billion new Taiwan dollars ($23.7 billion), beating the 746.34 billion TWD consensus. The world's largest chipmaker marked its sixth consecutive quarter of record profits, representing a 68.7% surge compared to the same period last year. TSMC continues to demonstrate robust monthly sales growth against the backdrop of ongoing demand for advanced semiconductors. In September, the company reported a 54.6% leap in revenue year-on-year to 511.86 billion new Taiwan dollars.
Operating profit margins for the third quarter hit 58.7%, exceeding the upper bound of the company's forecast range at 58%. This metric highlights TSMC's exceptional pricing power as the artificial intelligence boom fuels demand for specialized hardware. Advanced 3-nanometer chips accounted for the largest share of third-quarter revenue at 33%, followed by 5-nanometer and 7-nanometer nodes.
Expansion Plans and Segment Performance
High-performance computing formed the largest revenue segment at 68%, followed by smartphones at 21%. Meanwhile, the automotive sector emerged as the fastest-growing segment compared to the previous quarter, posting a 23% growth rate. Free cash flow spiked to 476.56 billion new Taiwan dollars in the third quarter, a massive jump from 139.38 billion TWD a year prior.
In earnings communications released previously, TSMC outlined plans to expand its manufacturing footprint in the United States, including a planned total investment of $265 billion in Arizona. According to reports, the company is also considering expanding beyond Arizona and evaluating a potential investment in Texas to further strengthen its US production presence. Furthermore, the TSMC board of directors approved a cash dividend of 7.00 new Taiwan dollars for the second quarter.
