TSMC Q3 Net Profit Surges 39% to Record High on Booming AI Demand, HPC Contributes Over Half of Revenue

TradingKey - On October 16, TSMC reported its third-quarter financial results, with net profit soaring 39% year-on-year to a record NT$452.3 billion, significantly beating market expectations of NT$405.47 billion.

As a leading chip foundry, TSMC continues to benefit from accelerated investment in AI infrastructure. TSMC CEO C.C. Wei stated, "AI demand remains robust, even stronger than we anticipated three months ago."

According to the financial report, TSMC's Q3 revenue reached NT$989.92 billion, marking a 30% increase from the previous year. Operating profit rose 39% to NT$500.69 billion. The gross profit margin improved to 59.5% in Q3, surpassing Q2's 58.6%, while the operating profit margin climbed to 50.6%, up 1% sequentially, marking the second consecutive quarterly increase.

In this quarter, the High-Performance Computing (HPC) segment, which includes AI and 5G applications, contributed 57% of total revenue, emerging as the primary revenue driver, followed by the smartphone business at 30%. By process technology, advanced wafers of 7nm and below accounted for 74% of TSMC's total wafer revenue this quarter.

William Li, a senior analyst at Counterpoint Research, noted that the growth of TSMC's most advanced chips fueled the Q3 revenue increase.

Analysts believe TSMC's Q3 revenue distribution reflects the ongoing strong demand for AI chips.

C.C. Wei expects AI demand to remain robust throughout the year, boosting semiconductor demand. In July, TSMC raised its 2025 revenue growth forecast to around 30%, and during this earnings call, it further revised its full-year revenue growth forecast to 34-36%.

Regarding capital expenditures, TSMC increased its full-year capex forecast from $38-42 billion to $40-42 billion, with 70% allocated to advanced process technologies.

On Thursday, TSMC executives noted that they are monitoring changes in tariff situations, with Taiwan negotiating to lower tax rates, which could potentially grant TSMC some tariff exemptions.

On Thursday, TSMC's stock on the Taiwan Stock Exchange closed up 1.37% at NT$1,485, while its U.S. shares (TSM) rose over 2% pre-market.