TSMC posts 39% profit jump, surpassing forecasts amid booming AI chip demand

Once again, Taiwan Semiconductor Manufacturing Company TSMC asserted its market leadership position, reporting .1 billion of revenue in the third quarter, a 30.3% revenue gain year on year. Analysts expected NT2.3 billion of net income; the company delivered NT2.3 billion, beating the expectation. 

The driver of the market leap TSMC is experiencing is the big bang of artificial intelligence AI, especially AI 1.0. The company reported a record net income of NT6.7 billion for the quarter prior. Beating expectations, the firm’s net income grew 39.1% quarter on quarter.

AI drives the .1 billion revenue from reporting NT7.46 billion market territory to NT9.92 billion. Underlying TSMC dynamics drive the gain, and the overall TSMC performance demonstrates AI’s transformative effects on firm performance.

As leaders in Taiwanese chip manufacturing, TSMC is taking a good share of the AI chip demand. These record-setting results reiterate the case.

Boom in AI Technology Generates Sharp Growth

C.C. Wei, CEO of TSMC, continues to accentuate the significance of artificial intelligence for TSMC’s growth. During Wei’s remarks in the TSMC earnings call, he said, “The recent advancement within the AI market continues to be very positive news.” He pointed out that the wider adoption of AI consumer and business models endlessly reinforced the growing market of ever more powerful computing and advanced semiconductor systems.

Such bullishness allows TSMC to revise up the revenue growth for 2025 to the mid-thirties percentage range from the thirty per cent mark. They also raised the forecast of capital expenditures on capacity expansion and technology to billion from billion.

The performance of TSMC demonstrates the extent to which AI technology is changing the structure of the economy. TSMC is one of the few companies in the world that produces chips for other companies that manufacture advanced technology GPU chips for AI, such as Nvidia, and high-end processors, along with AMD, which is a leading company in the AI hardware market.

High-performance computing is one of the many activities TSMC is engaged in.

Driving Income for TSMC

The revenue uplifts from the HCP High Performance Computing segment, which is the most advanced, ever-growing level of computing in the world, also incorporated AI and 5G technology and devices, and added a significantly greater builder, which was the 5G technology, to the services economy. Within the time frame of July to September, the branch with the artificial intelligence and 5G devices generated 57% of computing for TSMC.

TSMC stated that during the quarter, the delicate chips with a 7-nanometre or smaller fabrication process constituted 74% of the revenue from the total wafer shipments. In chip manufacturing, the smaller the nanometer, the more powerful the chip becomes, with faster performance, greater energy efficiency, higher computing, and additional processing benefits, all of which are essential for AI workloads.

Most experts in the field observe that the expansion in revenue for TSMC is mainly due to the increasing supply for its 3-nanometre and 4/5 nanometer class chips.

As stated by William Li, a senior analyst at Counterpoint Research, the strong TSMC earnings are a result of the strong traction at 3nm and high utilization at 4/5nm, both driven by the AI GPU and HPC orders, as well as from premium smartphone platforms.

Concerns regarding Global Trade and US Tariffs

Even with the performance results from TSMC being strong, global political and trade conditions are a potential risk. One of the issues worth noting, that reports suggest Taiwan is lowering the reciprocal rate and is tightening negotiations over US duties for chips.

C.C. Wei recognized that TSMC can pivot in response to the changes, TARIFFS IMPACT CONSUMER AND PRICE SENSITIVE MARKET. He also stated that TSMC is paying a lot on CAPEX for new manufacturing plants in the US, which is a move that might offset the concerns regarding trade disruptions or tariffs.

The rest of the world’s efforts to unclutter the supply chain and reduce the dependence on Taiwan, owing to rising geopolitical issues in the Asia Pacific, align with the goals of TSMC’s expansion in the US.