TSMC’s third-quarter profit beats forecasts riding on AI boom

The world’s largest contract chip maker TSMC has reported a forecast-beating 54% spike in third-quarter profit on the back of soaring demand for AI across industries.

The Taiwanese chipmaker, whose customers include Apple and Nvidia, posted a net profit of T$325.3 billion (USD 10.11 billion) for the quarter ended September 30, compared with the T$300.2 billion predicted by an LSEG SmartEstimate, according to a Reuters report.

TSMC said third-quarter revenue rose 36% year on year to USD 23.5 billion, better than the company’s previous forecast of USD 22.4 billion to USD 23.2 billion. The company has already announced third-quarter revenue of T$759.69 billion.

In the third quarter, TMSC’s business “was supported by strong smartphone and AI-related demand for our industry leading 3nm and 5nm technologies,” the company said in a statement.

Capital expenditure in the third quarter was USD 6.4 billion, compared with USD 6.36 billion in the second quarter.

“Based on the current business outlook, we expect for our fourth-quarter revenue to be between $26.1 billion and $26.9 billion, which represents a 13% sequential increase or a 35% year-over-year increase at the midpoint,” TSMC Chief Financial Officer Wendell Huang said during an earnings call.  

TSMC Chairman and CEO C.C. Wei said that AI demand is “real” and thanks to that the company has experienced the “deepest and widest growth of anyone in this industry.” 

“We have talked to our customers all the time, including our hyperscaler customers who are building their own chips. And almost every AI innovator is working with TSMC,” CEO C.C. Wei said in the earnings call.

The chipmaker is on a massive global investment spree of USD 65 billion for three semiconductor plants in Arizona besides opening its first factory in Japan this year.

TSMC’s sunny earnings came on the same week as Dutch firm ASML, which supplies machines to the Taiwanese company, issued a lower-than-expected sales forecast.