TSMC reports sixth straight quarter of record profit thanks to AI boom

Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest producer of advanced AI chips, announced on Thursday its sixth consecutive quarter of record earnings, driven by surging infrastructure spending in the tech sector. Analysts highlight the ongoing demand for TSMC's AI chipmaking capacity and its CoWoS advanced chip packaging technology.

This surge has propelled TSMC, a major supplier to Nvidia and Apple, to unprecedented heights, with its market capitalization nearly double that of South Korean rival Samsung Electronics, valued at around $2 trillion. The company reported a net profit of T$763.1 billion ($23.59 billion) for the July-to-September quarter, a 69% increase from the previous year, surpassing estimates of T$746.3 billion compiled by 16 analysts.

The guidance for the fourth quarter and full-year performance will be disclosed at 0600 GMT, with investors closely monitoring this due to potential US Federal Reserve interest rate hikes impacting AI stocks sensitive to higher borrowing costs. TSMC's shares on the Taipei Stock Exchange closed 2% lower on Thursday, while the broader market index dropped 3.4%.

The result marked TSMC's highest-ever quarterly net income and its 11th consecutive quarter of profit growth. In the previous quarter, TSMC reported a 50% year-on-year rise in revenue, exceeding market expectations and reaching a new record. The company is investing $265 billion to construct chip factories in Arizona, including an additional $100 billion revealed in July.

Reuters reported last week that TSMC is also considering an investment in Texas. Tesla CEO Elon Musk recently disclosed that Tesla and other companies plan to build and operate a Terafab AI chip complex, with TSMC potentially subleasing a portion of it. In its July earnings call, TSMC increased its capital expenditure forecast for the year to between $60 billion and $64 billion, up from a previous estimate between $52 billion and $56 billion.

ASML, the global leader in tools for making AI chips and advanced semiconductors, disclosed on Wednesday that customers are already placing orders for manufacturing equipment in 2029 and 2030, alleviating concerns about the momentum of the AI investment boom. TSMC's shares on the Taiwan Stock Exchange have gained 57% this year, matching the 62% rise in the broader Taiwanese market.