TSMC, the world's largest contract chipmaker, posted record quarterly results in the third quarter as demand for artificial intelligence chips surged. Net profit rose nearly 69% from a year earlier, while high-performance computing accounted for close to 70% of total revenue.
Reuters reported on the 15th that TSMC said third-quarter net profit rose 68.7% from a year earlier to NT$763.06 billion (about 31.8 trillion won).
The figure beat the market consensus of NT$746.3 billion (about 31.1 trillion won) compiled by financial data provider LSEG by about 2.2%. It marked the sixth consecutive quarter of record net profit for the Taiwanese company.
Revenue reached NT$1.49424 trillion (about 62.2 trillion won), up 50.9% from a year earlier and 17.6% from the previous quarter. In U.S. dollar terms, revenue came to $46.72 billion (about 63 trillion won), exceeding the company's guidance range of $44.6 billion to $45.8 billion.
Earnings per share climbed 68.7% to NT$29.43 from NT$17.44 in the third quarter of last year.
The strong results were driven by rising AI chip orders from major customers including Nvidia. High-performance computing accounted for 68% of TSMC's third-quarter revenue, up 11 percentage points from 57% a year earlier. Revenue from the segment grew 22% from the previous quarter, far outpacing the 10% growth in smartphones. Smartphones made up 21% of total revenue.
Advanced process nodes also contributed more to revenue. The 2-nanometer process accounted for 8% of total wafer revenue, up from 3% in the previous quarter. The 3-nanometer process made up 33%, 5-nanometer 28% and 7-nanometer 10%. Combined, nodes of 7 nanometers and below accounted for 79% of revenue, up 5 percentage points from 74% a year earlier.
Profitability improved from a year earlier but slipped from the previous quarter. The third-quarter gross margin was 66.4%, up 6.9 percentage points from a year earlier but down 1.3 percentage points from 67.7% in the second quarter. TSMC attributed the decline to costs tied to the early ramp-up of 2-nanometer production. The operating margin also fell to 58.7% from 60.3% in the previous quarter.
TSMC is pressing ahead with heavy capital spending to meet surging demand for AI chips. The company raised its capital expenditure guidance for this year to between $60 billion and $64 billion (about 80.9 trillion to 86.3 trillion won) and is expanding chip production facilities centered on Arizona. Its total investment commitments in the United States amount to $265 billion (about 356.3 trillion won).
Still, global equity markets have seen growing concerns over the lofty valuations of AI-related technology stocks and the sustainability of large-scale capital spending. Market volatility has also widened amid shifting expectations for U.S. interest rates. Against that backdrop, TSMC set record highs for both revenue and net profit in the third quarter on the strength of increased advanced-chip orders from major customers.