Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to post its sixth consecutive record quarterly profit when it reports results on October 15. Analysts forecast net income of about NT$746.3 billion ($23.4 billion), with demand for AI chips continuing to rise amid the general AI boom.
Analysts expect TSMC’s third-quarter net profit to rise about 65% year over year, according to a Reuters report citing an LSEG SmartEstimate based on forecasts from 16 analysts.
A profit figure above NT$706.56 billion would set a new quarterly record and mark the company’s 11th consecutive quarter of profit growth. The earnings call is set to drop at 0600 GMT, which is 2 p.m. in Taipei.
As the world’s largest contract chipmaker, TSMC supplies chips to major technology companies, including Nvidia and Apple. Valued at about $2.1 trillion, TSMC is Asia’s most valuable listed company, with a market cap at almost twice that of Samsung Electronics.
Revenue already cleared the bar
The sales numbers for the quarter are already well known and discussed, with TSMC reporting third-quarter revenue of about NT$1.49 trillion ($46.71 billion) on October 8, a 50% rise from one year earlier. This was higher than the NT$1.46 trillion SmartEstimate and came in above even the upper limit of the company’s own July guidance set at around $44.6 billion to $45.8 billion.
September carried most of the weight, with a monthly revenue of NT$511.86 billion, up 54.6% from last year. Across the first nine months of 2026, sales hit NT$3.90 trillion, equaling a 41.1% gain. TSMC has since raised its full-year forecast, projecting revenue growth of slightly more than 40% in US dollar terms.
Where the margin pinch comes from
TSMC’s net margin is expected to fall to around 50% in the third quarter, compared with 55.62% in the previous quarter, based on profit and revenue estimates cited in a Yahoo Finance earnings preview.
TSMC’s second-quarter margin was also lifted by a one-off gain of NT$63.20 billion from selling an 8.1% stake in Vanguard International Semiconductor. That boost is unlikely to recur, leaving the company without the same contribution in the current quarter.
TSMC’s transition to 2nm production is also expected to weigh on the company’s income margins. The company has said the manufacturing change could cut second-half gross margin by 3 to 4 percentage points, as early production faces low yields and high depreciation costs before output can reach previously attained levels of scale.
TSMC also raised its capital spending plans in July, setting a 2026 budget of $60 billion to $64 billion, up from its previous range of $52 billion to $56 billion. The new target is also significantly higher than the $40.54 billion the company spent in 2025.
Morgan Stanley analyst Charlie Chan expects TSMC to raise its full-year revenue growth forecast to the low-to-mid 40% range, according to an October 6 report. He pointed to strong demand for the company’s 3nm chips as a key factor behind the expected revision.
Texas investment question that remains unanswered
TSMC is putting $265 billion into factories in Arizona, including an extra $100 billion, which was announced in July. Reuters reported in September that TSMC was looking at an investment in Texas, and Tesla CEO Elon Musk has said his companies would build and operate the Terafab AI chip complex, with TSMC potentially subleasing a part of the site.
“Texas is a good location for a 2030s or 2040s expansion grand plan,” Morningstar analyst Felix Lee said, suggesting the proposal “may be a dangling carrot to preempt potential US trade and other policies.”
TSMC shares have seen a 63% increase in Taipei this year, slightly behind the general market’s 69% gain. With another record quarter largely expected, investors may require a little more than an earnings beat to take the stock to higher prices. Attention could instead turn to management’s fourth-quarter margin outlook, which may have a greater influence on the shares than just the headline profit figure.
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