- TSMC posted record third-quarter net profit of NT$763.06 billion, up nearly 69%, and guided fourth-quarter revenue to as much as 61% annual growth on continued AI chip demand.
- The figures arrived mid-selloff in semiconductor stocks, testing whether the AI-driven run can hold as margins face pressure from new US fabs.
- Analysts remain bullish.
Taiwan Semiconductor Manufacturing Co. (TSMC) reported record third-quarter profit on Thursday and forecast further growth in the current quarter, with revenue potentially climbing as much as 61% year over year on sustained demand for AI chips.
The company expects Q4 revenue of $52.3 billion to $54.3 billion, representing a 55% to 61% increase from the $33.73 billion recorded in Q4 2025. CFO Wendell Huang stated that the midpoint of the range implies an annual growth of 58%. Even the low end of the forecast exceeds analysts’ expectations of about $50 billion.
CEO C.C. Wei also raised TSMC’s full-year outlook, forecasting 2026 revenue growth of “around 44%” in US dollar terms, up from his July estimate of “more than 40%.” He cited “extremely robust” demand for the company’s most advanced chipmaking processes.
What the record quarter looked like
For the September quarter, TSMC posted net profit of NT$763.06 billion ($23.55 billion), up about 69% from a year earlier and ahead of the NT$746.3 billion that Reuters and LSEG had estimated. Revenue hit NT$1.494 trillion, or $46.72 billion, which was a gain of nearly 51% in Taiwan dollars.
The quarter’s record earnings meant TSMC has had six consecutive quarters of record earnings and the 11th straight quarter of profit growth from the previous year.
Advanced technologies of 7nm and below accounted for 79% of TSMC’s wafer revenue. Its 2nm process contributed about 8%, up from 3% in the second quarter.
The margin that gives investors pause
CFO Wendell Huang attributed TSMC’s 130-basis-point decline in gross margin to 66.4% largely to the costs of ramping up 2nm production. Operating margin was 58.7%, while net margin stood at 51.1%.
TSMC expects gross margin to narrow to 65%–67% in the current quarter, with the midpoint implying a sequential decline of about 40 basis points. Huang said overseas fabs would reduce gross margin by around 2 percentage points this year, with the impact rising to 3–4 percentage points in the coming years as more US plants come online.
TSMC shares slipped into a chip selloff
TSMC’s US-listed shares dropped by about 1.5% in premarket trading after its Taipei-listed stock fell by 3.41% in a wider chip selloff that also involved Samsung Electronics and SK Hynix.
Analysts have stayed bullish through the volatility, though, with the mean price target on shares listed in Taipei working out to $103.68. The figure represents a 34% increase compared to the October 14 closing price of $77.35. Analyst ratings include 25 buys, nine outperform ratings and one hold, with no sell recommendations, according to TIKR’s analysis on Yahoo Finance.
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Opeyemi Olanrewaju
Opeyemi specializes in creating and refining high-quality content focused on cryptocurrency, global financial markets and the economy. He graduated from the University of Ibadan with an MBBS degree. He has worked as Editor-in-Chief for his College’s editorial publication and previously at CFA. For over six years, he has helped safeguard uniqueness as news editor at Cryptopolitan.
