TSMC’s profits surge 39% to beat expectations, hit record high on AI demand

Taiwan Semiconductor Manufacturing Co., Ltd. announced Thursday that its third-quarter profit rose 39.1% year-on-year, beating expectations and setting a new record as demand for artificial intelligence chips remained strong.

Here are the company’s results compared to LSEG SmartEstimates:

Revenue: NT$989.92 billion ($33.10 billion), vs. expected NT$977.46 billion Net profit: NT$452.3 billion, vs. NT$417.69 billion

TSMC’s September quarter sales increased 30.3% year-on-year to NT$989.92 billion, also exceeding expectations. Net profit increased 13.7% quarter-on-quarter, hitting a record high at the time.

TSMC, Asia’s largest technology company by market capitalization, has benefited from the artificial intelligence boom and produced advanced AI processors for customers such as Nvidia and Apple.

“Recent developments in the AI ​​market continue to be very positive,” TSMC CEO CC Wei said in an earnings call, adding that increased adoption of AI models by consumers is leading to increased demand for computing and, by extension, semiconductor products. “Our confidence in the AI ​​megatrend is therefore strengthened,” he added.

Backed by this AI strength, the company has raised its 2025 revenue growth forecast to the mid-30% range, Wei said. As of July, the company expected full-year sales to increase by about 30%.

TSMC also raised its expected lower limit for capacity expansions and upgrades to $40 billion for the full year, from the previous lower limit of $38 billion.

TSMC’s high-performance computing division, which includes artificial intelligence and 5G applications, accounted for the bulk of sales in the July-September period, accounting for 57% of sales.

TSMC said advanced chips smaller than 7 nanometers accounted for 74% of TSMC’s total wafer revenue in the quarter.

In semiconductor technology, decreasing nanometer size means more compact transistor designs, leading to increased processing power and efficiency.

TSMC’s cutting-edge chip growth particularly drove the third-quarter revenue increase, said William Li, senior analyst at Counterpoint Research.

“TSMC’s strong revenue is a direct reflection of strong traction in 3nm and high utilization in 4/5nm, both driven by continued orders from AI GPU and HPC customers and premium smartphone platforms,” ​​Li told CNBC in a statement.

TSMC executives also said Thursday that they are closely monitoring U.S. tariff developments as Taiwan negotiates “mutual” tax rate cuts and the U.S. government considers industry-specific tariffs on semiconductors. However, TSMC may receive some exemptions.

“We understand that there is uncertainty and risk from the potential impact of tariff policy, especially in consumer-related and price-sensitive market segments,” Wei said, adding that the company will continue to monitor and plan for the impact.

TSMC has invested heavily in facilities in the United States, and that spending could help mitigate the impact of tariffs.

Taiwan’s TSMC stock has risen more than 38% since the beginning of the year.