TSMC Set for Record Profit Boost Driven by AI Chip Demand
Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading contract chipmaker, is set to announce a record-breaking 28% rise in third-quarter profit. This surge comes as demand for artificial intelligence (AI) infrastructure continues to grow rapidly, although new US tariffs could weigh on its future outlook.
Strong Forecasts Point to Record Earnings
According to LSEG SmartEstimate, which gives greater weight to analysts with strong accuracy records, TSMC’s net profit for the three months ending 30 September is expected to reach T$415.4 billion ($13.55 billion). This would surpass its previous high of T$398.3 billion, marking the company’s seventh consecutive quarter of profit growth.
Earlier, TSMC reported a 30% jump in third-quarter revenue, already exceeding market forecasts. The company’s ongoing growth reflects the relentless demand for advanced chips used in AI technologies.
AI Boom Continues to Drive Growth
Mario Morales, group vice president at research firm IDC, projected that TSMC’s annual revenue could grow between 30% and 35% this year. He noted that as AI infrastructure spending rises sharply, major chip suppliers like Nvidia and AMD have little choice but to rely on TSMC’s cutting-edge manufacturing capabilities.
“AI infrastructure remains a strategic land grab,” Morales said. “Even with tariffs and trade tensions creating uncertainty, investments from cloud-service providers and manufacturers will continue to focus heavily on this sector.”
Tariffs Add Uncertainty but Optimism Remains
TSMC, valued at around $1.22 trillion—nearly three times the market capitalisation of its South Korean rival Samsung Electronics—will release its earnings report on Thursday, followed by a call providing fourth-quarter guidance.
The impact of US President Donald Trump’s tariff policy on TSMC is still unclear. While Taiwan’s exports to the US currently face a 20% tariff, chips are excluded from the measure. However, the US Commerce Secretary, Howard Lutnick, recently proposed that Taiwanese companies divide chip production equally between Taiwan and the US. Taiwan has rejected this proposal, although TSMC is already investing $165 billion to build new factories in Arizona.
Despite potential risks from trade measures, TSMC’s shares have risen 30% this year, fuelled by optimism in the AI sector. This performance has also lifted Taiwan’s benchmark stock index by nearly 17% over the same period.
with inputs from Reuters