Taiwan Semiconductor Manufacturing Company just posted another record quarter. Then it told investors the next one should be even bigger.
TSMC expects fourth-quarter revenue to climb by as much as 61% from a year earlier. That guidance follows a third quarter in which net income hit NT$763.06 billion ($23.59 billion), up 68.7% year-over-year.
The numbers behind the record
TSMC reported third-quarter revenue of NT$1,494.24 billion ($46.72 billion) on October 15, 2026. That figure was up 50.9% from the same period last year and 17.6% higher than the previous quarter.
It also marked the sixth straight quarter of record earnings. TSMC has now strung together 11 consecutive quarters of year-over-year profit growth.
Diluted earnings per share came in at NT$29.43, or $4.60 per ADR.
Margins were the real eye-opener:
- Gross margin: 66.4%
- Operating margin: 58.7%
- Net margin: 51.1%
Looking ahead, management guided fourth-quarter revenue to a range of $52.3 billion to $54.3 billion. The comparable figure for Q4 2025 was $33.73 billion.
That gap implies year-over-year growth of 55% to 61%.
The 2nm story and the AI tailwind
In the third quarter, 2nm contributed 8% of TSMC’s wafer revenue. In the second quarter, that share was just 3%.
The broader mix leans heavily toward the leading edge. Advanced technologies, defined as 7nm and below, made up 79% of total wafer revenue in Q3.
Spending to keep up
TSMC kept its 2026 capital expenditure guidance at $60 billion to $64 billion.
Equipment suppliers seem to share that view. ASML, which provides critical chipmaking machinery, has made upward revisions of its own, pointing to strong demand across the semiconductor supply chain.
What this means for investors and the chip sector
A forecast of up to 61% revenue growth tells investors those orders are still flowing in at scale.
Gross margins of 66.4% suggest TSMC is not discounting to win business.
The 2nm ramp is a key thing to watch over the coming quarters. If its share of wafer revenue keeps climbing at anything close to the pace seen between Q2 and Q3, it could become a major driver of results in 2027.
With 79% of wafer revenue tied to advanced nodes, TSMC’s fortunes are closely linked to continued demand for cutting-edge AI and high-performance computing chips.
Spending $60 billion to $64 billion in a single year is a significant commitment. If AI demand holds, that investment extends TSMC’s lead. If it softens, the company could find itself carrying expensive capacity that takes longer to fill.
Investors will be watching the fourth-quarter print closely to see whether TSMC lands at the top of its range or simply clears the bottom.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.