TSMC Q3 profit blows past expectations on strong AI demand

TSMC (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 continued to boost its topline. 

The chipmaker also provided an upbeat outlook for the current quarter, citing improved capacity utilization and strong demand.

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

The firm’s third-quarter revenue came up 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%. Annual revenue is also expected to grow around 30%.

Earnings were boosted chiefly by increased demand for TSMC’s advanced 3-nanometer chips, which accounted for 20% of overall revenue from wafer sales. 

"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 ) posted a weak sales outlook for 2025, citing slow chip demand from sectors outside AI.

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

TSMC is a key component of the global chipmaking supply chain, and has benefited greatly from increased demand on the back of the AI boom.

The firm ranks Apple Inc (NASDAQ:AAPL ) and NVIDIA Corporation (NASDAQ:NVDA ) among its biggest clients, with the latter being a key source of demand for TSMC in the past year. Nvidia makes the most advanced AI chips in the market.

 

Source: Investing.com