Taiwan Semiconductor Manufacturing Co (TSMC) reported its sixth consecutive quarter of record net profit on Thursday, beating analysts’ expectations as global demand for artificial intelligence chips continued to fuel growth at the world’s largest contract semiconductor manufacturer.
The Taiwanese company posted third-quarter revenue of NT$1.49 trillion ($46.36 billion), exceeding the NT$1.47 trillion forecast, according to LSEG SmartEstimates, which gives greater weight to analysts with more consistent forecasting records. Net income reached NT$763.1 billion, surpassing the expected NT$746.34 billion.
Net profit rose 68.7% from the same period a year earlier, extending a run of quarterly records as the expansion of artificial intelligence infrastructure supported demand for advanced semiconductors. The results also demonstrated the company’s ability to maintain strong profitability amid growing demand for the chips used in high-performance computing systems.
TSMC’s operating margin reached 58.7% in the third quarter, exceeding the upper end of the company’s guidance range of 58%. The margin highlighted the pricing power the chipmaker has enjoyed as demand associated with the AI boom has strengthened its business.
High-performance computing was the largest contributor to revenue by platform, accounting for 68% of the total. Smartphones ranked second, representing 21%. The figures illustrate the importance of computing-related demand to the company’s business, alongside its established smartphone market.
Among its manufacturing technologies, 3-nanometre chips accounted for the largest share of third-quarter revenue, at 33%. They were followed by chips manufactured using 5-nanometre and 7-nanometre processes. The revenue breakdown reflects the contribution of advanced manufacturing technologies to TSMC’s overall business.
The automotive segment recorded the fastest quarter-on-quarter growth among the company’s platforms, expanding by 23%. Although high-performance computing remained the dominant revenue contributor, the increase in automotive-related business pointed to additional demand across the company’s markets.
TSMC’s financial performance also strengthened its cash generation. Free cash flow climbed to NT$476.56 billion in the third quarter, compared with NT$139.38 billion in the corresponding period a year earlier.
The company’s board approved a cash dividend of NT$7.00 for the second quarter, adding a shareholder distribution to a period of record profitability and stronger cash flow.
TSMC has also been planning to expand its manufacturing presence in the United States. In its second-quarter earnings announcement in July, the company outlined plans for a total investment of $265 billion in Arizona, signalling a substantial commitment to expanding its US operations.
The company is reportedly considering further expansion beyond Arizona, with a potential investment in Texas under evaluation, according to a Reuters report published on 30 September. The assessment comes as TSMC considers additional ways to strengthen its US manufacturing footprint.
The third-quarter results place TSMC’s AI-related business at the centre of its continued financial expansion, with high-performance computing accounting for more than two-thirds of revenue and operating profitability exceeding the company’s own guidance range.
