TSMC Eyes Sixth Straight Record Profit Quarter on AI Demand
TSMC, the world’s largest maker of advanced AI chips, is expected to report record quarterly earnings for the sixth consecutive time when it releases third-quarter results on Thursday. Analysts point to heavy infrastructure spending across the tech sector, which keeps demand high for the company’s AI chipmaking capacity and its CoWoS advanced packaging technology.
Key Takeaways
- Analysts expect TSMC’s third-quarter net profit to jump 65% to T$746.3 billion (about $23.4 billion), according to an LSEG SmartEstimate compiled from 16 analysts.
- Any result above T$706.56 billion would be the company’s highest quarterly net income ever and its 11th straight quarter of profit growth.
- Third-quarter revenue, reported last Thursday, rose 50% year on year and beat market forecasts.
- Investors will also listen for TSMC’s fourth-quarter and full-year guidance, and for any comment on a possible Texas expansion.
What Analysts Expect on Thursday?
TSMC is Asia’s most valuable company, with a market value of around $2.1 trillion, almost double that of South Korean rival Samsung Electronics. It is a key supplier to Nvidia and Apple, which helps explain why demand for its most advanced chips has stayed strong.
The profit forecast comes from an LSEG SmartEstimate, which gives more weight to analysts with a stronger record of accuracy. That makes it a useful benchmark, though it is still a forecast. The earnings call, where TSMC will give fourth-quarter and updated full-year guidance, is scheduled for 0600 GMT.
The company has already shown strong momentum. Its third-quarter revenue, published on October 8, rose 50% from a year earlier and set a new record.
Guidance Could Move Higher
Morgan Stanley analyst Charlie Chan, in a report dated October 6, said he expects TSMC to lift its full-year revenue growth forecast to the low-to-mid 40% range. The current guidance is for growth of more than 40%. He cited strong demand for TSMC’s 3-nanometre chips.
The Texas Question
TSMC is putting $265 billion into chip factories in Arizona, which includes an extra $100 billion announced in July. In September, Reuters reported that the company was evaluating a possible investment in Texas. Last week, Elon Musk said his companies would build and operate the Terafab AI chip complex, with TSMC potentially subleasing part of it.
Analysts expect TSMC to be asked about Texas on the call, and they are not fully aligned on how urgent it is.
- The case for it: Chan said an expansion in Texas could become necessary in about five years, given growing customer demand and limited space at the Arizona site.
- The case for caution: Phelix Lee, senior equity analyst at Morningstar, sees little urgency, since some planned Arizona fabs are still to be built. He described a Texas plan as possibly “a dangling carrot to preempt potential US trade and other policies,” and called the state better suited to a longer-term expansion in the 2030s or 2040s.
Spending and Share Performance
On its July call, TSMC raised its capital expenditure forecast for this year to between $60 billion and $64 billion. It was previously guiding to the high end of $52 billion to $56 billion.
TSMC’s Taipei-listed shares are up 63% so far this year. That is slightly behind the broader Taiwan market, which has gained 69%.
What to Watch?
This is my read of the situation, not part of the Reuters reporting. A profit beat is widely expected, so the market reaction may depend less on the headline number and more on three things: whether guidance is raised, how TSMC describes AI demand into next year, and how much it says about Texas. The capex figure is another useful signal, since it shows how confident the company is about future orders.
One reminder on the numbers: the T$746.3 billion figure is an estimate. Actual results could land higher or lower, and the story will change once TSMC reports.
Frequently Asked Questions
When will TSMC report its third-quarter results?
- On Thursday, with an earnings call scheduled for 0600 GMT.
What profit are analysts expecting?
- A 65% jump in net profit to T$746.3 billion (about $23.4 billion), according to an LSEG SmartEstimate from 16 analysts.
What would count as a record?
- Anything above T$706.56 billion would be TSMC’s highest-ever quarterly net income.
Why is TSMC growing so fast?
- Strong demand for AI chipmaking capacity and its CoWoS packaging technology, driven by heavy tech-sector infrastructure spending.
