TSMC Posts Record Sixth Straight Quarterly Profit on AI Chip Demand

TSMC Beats Estimates on AI-Driven Demand

Taiwan Semiconductor Manufacturing Co. on Thursday reported a record third-quarter net profit of NT$763.1 billion, up 68.7% from a year earlier, as the global appetite for AI chips continued to fuel demand. The world's largest contract chipmaker posted a record net profit for a sixth straight quarter.

Revenue came in at 1.49 trillion new Taiwan dollars ($46.36 billion), above the NT$1.47 trillion expected, while net income of NT$763.1 billion surpassed the NT$746.34 billion forecast.

Margins and Product Mix

TSMC's third-quarter operating margin reached 58.7%, exceeding the upper end of its guidance range of 58%, showcasing the pricing power the company enjoys as the AI boom drives semiconductor demand.

By technology, 3-nanometer chips accounted for the largest share of revenue at 33%, followed by 5-nanometer and 7-nanometer chips. By platform, high-performance computing made up 68% of revenue, followed by smartphones at 21%. Automotive was the fastest-growing segment on a quarter-on-quarter basis, with a 23% growth rate.

Cash Flow, Dividend and U.S. Expansion

The company's free cash flow surged to NT$476.56 billion in the third quarter, up from NT$139.38 billion a year earlier. TSMC's board approved a NT$7.00 cash dividend for the second quarter.

During its second-quarter earnings announcement in July, TSMC outlined plans to expand its U.S. manufacturing footprint, including a total planned investment of $265 billion in Arizona. The chipmaker is also reportedly considering expanding beyond Arizona, evaluating a potential investment in Texas as it looks to further strengthen its U.S. manufacturing presence.

Sources: CNBC · Techmeme