TSMC profit surges past expectations, sending US-listed shares higher

Investing.com -- Taiwan Semiconductor Manufacturing Co. (NYSE:TSM ) -- the world’s biggest contract chipmaker -- posted a stronger-than-expected third quarter profit on Thursday, as sustained demand from the artificial intelligence industry boosted its top-line returns.

The chipmaker also provided an upbeat outlook for the current quarter, partly citing improved capacity utilization. US-listed shares in the Taiwanese firm jumped by more than 10% in early trading.

TSMC clocked a net profit of T$325.26 billion ($10.1 billion) in the three months to Sept. 30, it said in a press release. The figure was higher than a Reuters estimate of T$300.2 billion.

Third-quarter revenue climbed to T$759.69 billion, up 39% from last year. CFO Wendell Huang said fourth quarter revenue will be between $26.1 billion and $26.9 billion, with a gross margin of 57% and 59%, while annual revenue is also expected to grow around 30%.

Sales were bolstered chiefly by TSMC's advanced 3-nanometer chips, which accounted for 20% of overall revenue from wafers, the company said.

"We continue to observe extremely robust AI-related demand from our customers," CEO C.C. Wei said in a post-earnings webcast.

Thursday's earnings come just days after semiconductor equipment maker ASML (NASDAQ:ASML ) unveiled a weak sales outlook for 2025 due in part to slow chip demand from sectors outside of AI.

TSMC's earnings reflected this trend, with revenue from its Digital Consumer Electronics sector, which churns out chips for devices such as smart TVs and cameras, sinking 19% quarter-on-quarter. But this was largely offset by a spike in revenue from its core High-Performance Computing unit. Both TSMC and ASML are considered bellwethers for the chip industry.

Tech giants Apple (NASDAQ:AAPL ) and Nvidia (NASDAQ:NVDA ) rank among TSMC's biggest clients. Nvidia -- a maker of some of the most advanced AI chips in the market -- has become a particular focal point for the enthusiasm around the nascent technology.

"[W]ithout [TSMC], there is no Nvidia and the current AI movement could come to a halt," said Paul Marino, Chief Revenue Officer at Themes ETFs.

"TSMC is a major gauge of how quickly the AI movement and hyper data centers can be built out and how healthy supply dynamics are in the space."

(Ambar Warrick contributed reporting.)

Source: Investing.com