TSMC posts record net profit for sixth straight quarter on sustained AI chip demand

Marijan Hassan - Tech Journalist

11 minutes ago

2 min read

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s dominant contract chipmaker, reported record third-quarter financial results that surpassed Wall Street expectations, marking its sixth consecutive quarter of record net profit. Consequently, the foundry has raised its full-year growth outlook driven by relentless global demand for advanced artificial intelligence accelerators and high-performance computing (HPC) silicon.

Despite the strong financial results, executive leadership expressed measured caution regarding infrastructure capacity constraints and long-term planning going into 2027.

Surging Net Income and Record Operating Margins

For the third quarter, TSMC generated net income of NT$763.06 billion ($23.59 billion), marking a 68.7% year-over-year increase, and beating consensus estimates of NT$746.3 billion compiled by LSEG. Consolidated quarterly revenue climbed 41.2% year over year in U.S. dollar terms to $46.72 billion (NT$1.49 trillion), exceeding guidance as hyperscale cloud providers expand their data center builds.

Key financial and manufacturing metrics from the Q3 earnings report include:

Expanding Profit Margins: Gross margin reached a whopping 66.4%, while operating margin expanded to 58.7% and net margin hit 51.1%, reflecting high operational efficiency and premium pricing power on advanced nodes.
Node Revenue Contribution: Chips manufactured on advanced process nodes (7nm and below) represented 79% of total wafer revenue. The flagship 3nm process node alone generated 33% of wafer revenue, followed by 5nm at 28% and 7nm at 10%.
HPC Segment Dominance: High Performance Computing, the primary category encompassing data center AI accelerators, accounted for 68% of total revenue, while the smartphone segment generated 21%.

Expanding Fab Footprint and Raised Full-Year Outlook

TSMC Chairman and CEO C.C. Wei stated that AI demand continues to outpace total fab capacity, confirming there is no signal of a slowdown in the broader AI investment supercycle. Consequently, TSMC raised its full-year 2026 revenue growth forecast to approximately 44% in U.S. dollar terms, up from its previous guidance of over 40%.

To accommodate persistent order backlogs, TSMC detailed ongoing global manufacturing expansions:

Additional 3nm Facility in Taiwan: The Chip giant will construct an additional 3nm fabrication facility in Tainan, scheduled for volume production in the first half of 2028.
Arizona Expansion Ahead of Schedule: The company has concluded construction on its second wafer fab in Arizona, and mass production is now slated for Q3 2027, ahead of its initial timeline.
Capital Expenditures Maintenance: TSMC reaffirmed its full-year 2026 capital spending budget at $60 billion to $64 billion to fund next-generation 2nm and A16 process development.

Prudent Planning Ahead of 2027

While forecasting robust fourth-quarter revenue of up to $54.3 billion, C.C. Wei noted that TSMC remains "prudent in business planning going into 2027," citing macro environment variables and supply chain bottlenecks in high-bandwidth memory (HBM). Nevertheless, as the exclusive foundry partner for key hardware developers including Nvidia, Apple, AMD, and Qualcomm, TSMC’s record results underscore that structural enterprise demand for advanced AI silicon remains solid across global technology supply chains.