TSMC revenue rises 41% as AI chip demand drives growth

Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest producer of advanced AI chips, announced on Thursday its sixth straight quarter of record earnings. The surge in profits was attributed to the growth in infrastructure spending within the tech sector. Industry experts emphasize that demand for TSMC's AI chipmaking capacity and its CoWoS advanced chip packaging technology remains robust.

As a result, TSMC, which is the most valuable company in Asia and a crucial supplier to Nvidia and Apple, has reached unprecedented heights, with a market capitalization nearly double that of its South Korean rival, Samsung Electronics, amounting to approximately $2 trillion.

During the July-to-September quarter, TSMC's net profit reached T$763.1 billion (US$23.59 billion), marking a 69% increase compared to the previous year. This figure surpassed the LSEG SmartEstimate, which was compiled from the projections of 16 analysts. The company is scheduled to release its guidance for the fourth quarter and full-year performance at 0600 GMT, which will be closely monitored by investors due to concerns about potential further interest rate hikes by the US Federal Reserve, which could negatively impact shares of AI stocks that are particularly vulnerable to higher borrowing costs.

TSMC's shares, listed in Taipei, experienced a two percent decline on Thursday ahead of the earnings announcement. The broader market, represented by the benchmark index, also fell by 3.4 percent. Nevertheless, the outcome represents TSMC's highest-ever quarterly net income and its 11th consecutive quarter of profit growth. In the previous week, the company reported a 50% year-on-year increase in third-quarter revenue, surpassing market expectations and achieving a new record.

TSMC is planning to invest $265 billion in constructing chip factories in Arizona, USA, including an additional $100 billion that was disclosed in July. Furthermore, Reuters reported last week that TSMC is considering a potential investment in Texas. Tesla CEO Elon Musk also mentioned earlier this week that his company and TSMC were evaluating the construction and operation of a Terafab AI chip complex, with TSMC potentially subleasing a portion of it.

During its July earnings call, TSMC raised its capex forecast for the current year to an estimated range of $60 billion to $64 billion, up from a previous prediction of $52 billion to $56 billion. ASML, the world's leading manufacturer of tools used to produce AI chips and advanced semiconductors, revealed on Wednesday that customers are already placing orders for 2029 and 2030, which alleviates concerns about the possible waning momentum of the AI investment boom.

TSMC's shares listed in Taipei have gained 57% so far this year, aligning with a 62% rise in the broader Taiwanese market.