TSMC set to report strong profit driven by AI boom

TSMC Q3 earnings: Taiwan Semiconductor Manufacturing, the dominant producer of advanced chips used in artificial intelligence applications, is expected to report a 42 per cent leap in third-quarter profit on Thursday thanks to soaring demand.

The world's largest contract chipmaker, whose customers include Apple AAPL.O and Nvidia NVDA.O, has benefited from a surge towards AI across a spectrum of industries.

TSMC TSM.N is set to report a net profit of T$300.1 billion ($9.33 billion) for the quarter ended Sept. 30, according to an LSEG SmartEstimate drawn from 23 analysts. SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.

That estimate compares to the 2023 third-quarter net profit of T$211 billion.

TSMC last week reported a jump in Taiwan-dollar denominated third-quarter revenue, easily beating market expectations. It will give fourth-quarter revenue guidance in US dollars.

However, on Tuesday, ASMLASML.AS, the world's biggest chipmaking equipment supplier to companies including TSMC, forecast lower than expected 2025 sales and bookings on sustained weakness in parts of the chip market, pushing the Dutch firm's shares to their biggest one-day drop since 1998.

On Wednesday, TSMC's shares closed down 2.3 per cent at T$1,045, though not far off their historic high of T$1,080 hit on July 11.

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

The chipmaker is spending billions of dollars building new factories overseas, including $65 billion on three plants in the US state of Arizona, though it has said most manufacturing will remain in Taiwan.

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

The second half of the year is traditionally the peak season for Taiwanese tech companies as they race to supply customers ahead of the year-end holiday season in major Western markets.

The AI boom has helped drive up the price of shares in Asia's most valuable company, with TSMC's Taipei-listed stock leaping 76 per cent so far this year, compared with a 28 per cent gain for the broader market.

TSMC, colloquially referred to in Taiwan as the "sacred mountain protecting the country" for its critical role in Taiwan's export-dependent economy, faces little competition, though both Intel INTC.O and Samsung 005930.KS are trying to challenge its dominance.