TSMC posts record profit amid surging demand for AI chips

The world's largest contract semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), ended the third quarter of 2026 with record profit. The company continues to grow revenue thanks to large-scale orders for advanced AI chips, despite investor concerns about the sustainability of the global AI boom.

This is evidenced by TSMC's financial report released on October 15, reported Bloomberg and The Wall Street Journal.

The company's net profit grew by 68.7% year-on-year to NT$763.06 billion, or approximately US$23.7 billion. This is the sixth consecutive quarter that TSMC has set a new profitability record.

The result exceeded analysts' expectations, who forecast a profit of NT$731.77 billion, FactSet data shows.

Quarterly revenue increased by 50.9% in local currency to NT$1.49 trillion. In dollar terms, it was US$46.72 billion, up 41.2% from a year earlier.

Compared to the second quarter, revenue grew by 17.6% and net profit by 8%. The company's net margin reached 51.1%, meaning more than half of quarterly revenue turned into profit.

The main source of growth remains orders for high-performance chips for data centers and AI systems. TSMC manufactures advanced processors for major tech companies, including Nvidia and Apple.

Customers' transition to more advanced manufacturing technologies plays an important role. For the quarter, 79% of wafer sales revenue came from chips made using 7-nanometer and more advanced process nodes.

In particular, the share of the latest 2-nanometer technology rose to 8%, while 3-nanometer chips accounted for 33%, and 5-nanometer chips for another 28% of revenue in this segment.

At the same time, ramping up new production processes requires significant investment. TSMC's gross margin in the third quarter was 66.4%, down from 67.7% a quarter earlier.

Nevertheless, the company expects further growth. For the fourth quarter, TSMC forecasts revenue of US$52.3 billion to US$54.3 billion, which exceeds the July-September result. The forecast gross margin is 65–67%.

Company CFO Wendell Huang noted that demand for the most advanced manufacturing technologies remains high, and the ramp-up of 2-nanometer chip production will support results at the end of the year.

Meanwhile, investors are increasingly scrutinizing the prospects of the global AI market. Massive spending by tech corporations on data centers and computing infrastructure raises questions about the future return on these investments.

For TSMC, this creates a risk of dependence on continued order growth in the AI sector. So far, the company's quarterly results indicate sustained high demand for advanced manufacturing capacity.

Recall, in July TSMC already reported significant profit growth and raised revenue forecasts amid orders from AI developers. Third quarter results confirmed the continuation of this trend.

Sources: TSMC, Bloomberg, The Wall Street Journal