TSMC saw third-quarter profit jump 40% on strong AI chip demand

By Ben Blanchard and Faith Hung

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co, a major producer of advanced chips used in artificial intelligence applications, is expected to report a 40% leap in third-quarter profit on Thursday due to growing demand.

The world's largest contract chipmaker, whose customers include Apple and Nvidia, has benefited from the move toward AI.

TSMC is set to report a net profit of T$298.2 billion ($9.27 billion) in the quarter ended Sept. 30, according to an LSEG SmartEstimate polled by 22 analysts. SmartEstimates gives more weight to forecasts from analysts who are more consistently accurate.

This estimate compares to net profit of T$211 billion for the third quarter of 2023.

TSMC last week reported a jump in third-quarter earnings reported in Taiwanese dollars, comfortably beating market expectations. The company gives its revenue outlook in US dollars at its earnings conference.

“Many of TSMC's major clients, including Apple, Nvidia, AMD, Qualcomm and MediaTek, are launching new products that rely heavily on TSMC's advanced process technology,” said Lee Fung-kuo, chairman of President Capital Management.

“TSMC's Q3 earnings will greatly exceed expectations,” Lee added.

TSMC, in its quarterly earnings call at 0600 GMT on Thursday, will update its outlook for the current quarter as well as the full year, including capital spending as it races to expand production.

TSMC is spending billions building new factories overseas, including $65 billion at three plants in the US state of Arizona, although it says most manufacturing will remain in Taiwan.

In its last earnings call in July, TSMC raised its full-year revenue forecast and adjusted its capital spending plans for this year to between $30 billion and $32 billion, from a previous forecast of $28 billion to $32 billion.

The AI ​​boom has helped boost the share price of Asia's most valuable company, with TSMC's Taipei-listed stock up 77% so far this year, compared with a 28% gain for the broader market.

Hsinchu-headquartered TSMC, colloquially referred to as “the sacred mountain that protects the country,” faces little competition for its key role in Taiwan's export-oriented economy.

Once a dominant force in the semiconductor industry, five-decade-old Intel is facing its worst period yet as losses mount at contract manufacturing units it is building in hopes of challenging TSMC.

($1 = 32.1570 Taiwan dollars)

(Reporting by Ben Blanchard and Faith Hung; Editing by Christopher Cushing)