TSMC Q3 profit jumped 68.7% from a year earlier to a record NT$763.06 billion, or about $23.6 billion, as demand for advanced chips used in artificial-intelligence systems kept the world’s largest contract chipmaker running at exceptional scale.

 

The October 15 result extended TSMC’s record-profit streak to six quarters. Revenue rose 50.9% to NT$1.494 trillion, while the company forecast another step up in fourth-quarter sales even as management cautioned that macroeconomic uncertainty requires prudent planning for 2027.

 

The quarter produced four closely watched signals:

  • Net income reached NT$763.06 billion.
  • Advanced nodes generated 79% of wafer revenue.
  • Two-nanometer chips entered the mix at 8%.
  • Fourth-quarter revenue was guided to $52.3–$54.3 billion.

 

TSMC Q3 Profit Jumps 69% to a Sixth Record

TSMC reported $46.72 billion in third-quarter revenue, up 41.2% in US-dollar terms and 16.2% from the preceding quarter. Net income also increased 8% sequentially, showing that the latest record was not simply a comparison with a weak year-earlier period.

 

The profit figure exceeded the NT$746.3 billion LSEG SmartEstimate compiled from 16 analysts, according to Reuters. TSMC’s NT$29.43 diluted earnings per share rose at the same 68.7% annual rate as net income, while the net profit margin reached 51.1%.

 

Those figures strengthen the evidence that spending on AI compute is translating into earnings for the companies that manufacture the most advanced silicon. TSMC supplies major chip designers including Nvidia and Apple, while its foundry model lets customers build proprietary processors without operating leading-edge fabrication plants themselves.

 

High-performance computing accounted for 68% of TSMC’s quarterly revenue, up from 57% a year earlier. Smartphone chips supplied another 21%, with automotive and Internet of Things products each contributing 4%, according to the company’s management report.

 

Two-Nanometer Production Enters the Revenue Mix

Two-nanometer production supplied 8% of wafer revenue in the quarter, up from 3% in the preceding period. Three-nanometer chips accounted for 33%, five-nanometer for 28% and seven-nanometer for 10%, taking the combined contribution from advanced technologies to 79%.

 

The rapid two-nanometer ramp matters because each process transition demands enormous investment before yields, volumes and customer designs mature. Early production can pressure profitability even while it creates the foundation for higher-value processors and larger orders in later quarters.

 

That effect was visible in TSMC’s gross margin. The measure reached 66.4%, well above 59.5% a year earlier but 1.3 percentage points below the second quarter. TSMC attributed the sequential decline primarily to dilution from the initial N2 ramp rather than weakening demand.

 

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TSMC Keeps 2026 Capital Spending at $60–64 Billion

TSMC maintained its 2026 capital-expenditure plan at $60 billion to $64 billion, Reuters reported. That spending supports new fabrication capacity, advanced packaging and overseas expansion, all of which are needed if AI accelerator, networking and custom-silicon demand continues to outpace available supply.

 

The company generated NT$919.77 billion in cash from operations during the third quarter and spent NT$443.21 billion on capital equipment. Free cash flow was NT$476.56 billion, giving TSMC substantial internal funding for factories and process development despite the scale of its investment program.

 

Capacity remains the central constraint. Reuters reported that demand still exceeds TSMC’s supply, including for advanced packaging such as CoWoS, which connects compute dies with high-bandwidth memory. That bottleneck means the AI hardware cycle depends on more than transistor production alone; packaging throughput and system integration also determine deliveries.

 

TSMC is also expanding its US manufacturing footprint. Reuters said the company’s total Arizona commitment has reached $265 billion and that construction of its second fab is complete, with mass production scheduled for the third quarter of 2027, earlier than previously planned.

 

Q4 Guidance Extends the AI-Chip Growth Test

For the fourth quarter, TSMC expects revenue of $52.3 billion to $54.3 billion, compared with $33.73 billion a year earlier. The upper end would represent growth of roughly 61%, although the forecast remains management guidance rather than a reported result.

 

The company also projects a gross margin of 65% to 67% and an operating margin of 56.5% to 58.5%, based on an assumed exchange rate of NT$31.8 per US dollar. Those ranges suggest management expects the two-nanometer ramp to remain compatible with unusually strong profitability.

 

TSMC raised its expectation for full-year 2026 revenue growth to about 44%, Reuters reported, but said it was approaching 2027 planning carefully because consumer and price-sensitive markets face higher component costs and macroeconomic uncertainty.

 

That caution is material rather than contradictory. The third-quarter numbers show that AI demand is delivering record revenue, profit and advanced-node utilization now. The next test is whether customer investment, electricity availability, data-center construction and packaging capacity remain aligned closely enough to support another year of expansion.