Key Points
- TSMC is expected to report a 40% increase in Q3 profit, driven by high AI chip demand.
- The forecasted Q3 profit is T$298.2 billion, up from T$211 billion in the same period last year.
- TSMC’s major clients, including Apple, Nvidia, and AMD, rely heavily on its advanced chip technologies.
- TSMC is expanding its global production, investing $65 billion in new plants in Arizona.
Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, is poised to announce a 40% rise in third-quarter profit, driven by the surging demand for advanced chips in artificial intelligence (AI) applications. TSMC, a key supplier to tech giants such as Apple and Nvidia, has played a pivotal role in the AI revolution, which has boosted its earnings significantly.
For the quarter that ended September 30, analysts predict TSMC will report a net profit of T$298.2 billion ($9.27 billion), based on estimates from 22 analysts compiled by LSEG SmartEstimate, which prioritizes forecasts from analysts with consistent accuracy. This forecast marks a substantial increase from the T$211 billion net profit reported in the same period last year.
The robust demand for AI chips, which power applications ranging from high-performance computing to cutting-edge smartphones, has bolstered TSMC’s revenue. The company’s key clients, including Apple, Nvidia, AMD, Qualcomm, and MediaTek, are launching new products that rely heavily on TSMC’s advanced semiconductor technologies. “TSMC’s Q3 earnings will exceed expectations by a lot,” commented Li Fang-kuo, chairman of President Capital Management.
Last week, TSMC announced a jump in third-quarter revenue, comfortably beating market expectations. While the revenue was reported in Taiwan dollars, the company typically provides its revenue outlook in U.S. dollars during its earnings conference. Investors and analysts eagerly await TSMC’s earnings call, scheduled for Thursday at 0600 GMT, when the company will update its revenue and capital expenditure forecasts for the current quarter and the entire year.
TSMC is expanding its global production capacity with significant investments in overseas factories. The company is spending $65 billion to build three new plants in Arizona, U.S., though it maintains that most of its manufacturing will remain in Taiwan. TSMC has already raised its full-year revenue forecast and adjusted its capital expenditure plans to between $30 billion and $32 billion from an earlier range of $28 billion to $32 billion.
The surge in AI demand has propelled TSMC’s stock price, with shares in the company soaring 77% this year, outperforming the broader Taiwanese market’s 28% rise. TSMC’s role as a key player in Taiwan’s export-driven economy has earned it the nickname “sacred mountain protecting the country.” Despite its dominance, TSMC faces some competition from Intel, which is attempting to challenge the Taiwanese chipmaker with its contract manufacturing unit. However, Intel is struggling and experiencing mounting losses as it builds out its operations.
