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TSMC Q3 Profit Jumps 69% on Strong AI Chip Demand

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2330NT$2,440.00 −2.01%

Taiwan Semiconductor Manufacturing Co. (TWSE:2330) reported a 68.7% surge in third-quarter net income to NT$763.06 billion, topping analyst estimates. Revenue rose 50.9% to NT$1.49 trillion, driven by strong artificial intelligence chip demand. Diluted earnings reached NT$29.43 per share, or $4.60 per ADR. Despite the earnings beat, the company's Taiwan-listed shares dipped 2.01% to 2,440 TWD, while U.S.-listed shares fell 3.4% on Wednesday.

Profitability held up well as gross margin hit 66.4% and operating margin reached 58.7%, topping management forecasts. Advanced chips accounted for 79% of wafer revenue, led by 3nm at 33%, 5nm at 28%, and 2nm chips making up 8%. The solid margins eased fears that high expansion costs and ramping new technologies would dilute profits.

Investors are now turning to management's upcoming earnings call for fourth-quarter guidance and full-year outlook updates. Key areas of focus include capital expenditure plans, with 2026 capex previously projected at $60 billion to $64 billion, as well as progress on global expansion projects.

Key points

  • Taiwan Semiconductor Manufacturing Co. net income rose 68.7% year-over-year to NT$763.06 billion in Q3, beating expectations.
  • Quarterly revenue jumped 50.9% to NT$1.49 trillion, with earnings per ADR coming in at $4.60.
  • Operating margin reached 58.7%, exceeding management guidance of 56% to 58%.
  • Advanced technologies made up 79% of total wafer revenue, led by 3nm chips at 33%.
  • Taiwan Semiconductor Manufacturing Co. shares fell 2.01% in Taiwan to 2,440 TWD following a 3.4% drop in U.S. ADRs.

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Questions and answers

What were TSMC Q3 earnings results?

Taiwan Semiconductor Manufacturing Co. reported Q3 net income of NT$763.06 billion, up 68.7% year-over-year, on revenue of NT$1.49 trillion. Diluted earnings per share reached NT$29.43, or $4.60 per ADR.

What were TSMC Q3 profit margins?

The company posted a gross margin of 66.4% and an operating margin of 58.7%, beating management guidance of 56% to 58%. Net margin stood at 51.1%.

What percentage of TSMC revenue comes from advanced chips?

Chips using 7-nanometer and more advanced technologies represented 79% of wafer sales in the third quarter, with 3nm contributing 33%, 5nm adding 28%, and 2nm accounting for 8%.