EL7.AI
StocksMediumUpdated×5•Originally published 15 October 2026•Updated 15 October 2026•
4 min read

TSMC profit jumps 68.7% on demand for AI processors

Key Facts

1Third-quarter net profit reached 763.06 billion Taiwan dollars.
2Net profit and diluted earnings per share rose 68.7% year on year.
3Revenue reached $46.72 billion, up 41.2% year on year and 16.2% quarter on quarter.
4Net margin fell to 51.1% from 55.6% in the previous quarter, compared with 45.7% a year earlier.
5The company forecast fourth-quarter revenue of between $52.3 billion and $54.3 billion.

Taiwan Semiconductor Manufacturing Co. reported third-quarter 2026 net profit of 763.06 billion Taiwan dollars, beating expectations on demand for AI processors. The company said in its earnings statement that net profit and diluted earnings per share rose 68.7% from the same period a year earlier. Profit exceeded the LSEG SmartEstimate of 746.3 billion Taiwan dollars, according to Reuters. The news agency attributed the record profit to surging global demand for the company's processors used in AI. According to Seeking Alpha, earnings per American depositary receipt were $4.60, beating its estimate by $0.09 per receipt.

On sales, the company said third-quarter revenue reached $46.72 billion, exceeding its previous guidance range and analyst estimates. U.S. dollar-denominated revenue grew 41.2% from a year earlier, according to the company's statement, and also rose from the previous quarter. Revenue increased 16.2% quarter on quarter, according to the statement, alongside year-on-year profit growth. Revenue exceeded analyst estimates by $1.02 billion, according to quarterly results figures published by Seeking Alpha. The company had previously forecast revenue of between $44.6 billion and $45.8 billion for the period, according to its earnings page.

The management report showed high-performance computing accounted for a growing share of the company's business, generating 68% of third-quarter revenue. The segment contributed 66% of revenue in the previous quarter, according to the comparison in the company's quarterly report. A year earlier, its share was 57%, while smartphones accounted for a larger share then than in the current third quarter. Smartphone revenue, meanwhile, fell to 21% of the total from 22% in the previous quarter, according to the report. Smartphones represented 30% of revenue in the same period a year earlier, as the business mix shifted toward a greater contribution from high-performance computing.

In the manufacturing technology mix, 2-nanometer technology contributed 8% of wafer revenue in the third quarter, according to the management report. That compared with a 3% share in the previous quarter, as the company ramped up production using the technology during the period. The technology's contribution was 0% in the same period a year earlier, according to the annual comparison provided by management in its results. Overall, advanced technologies, which the company defines as 7-nanometer and more advanced technologies, accounted for 79% of total wafer revenue. Management said during the earnings call that the quarter-on-quarter decline in gross margin was primarily due to "margin dilution from the ramp-up of 2-nanometer production."

The company's gross margin was 66.4% in the third quarter, down from the previous quarter, according to the management report accompanying the results. The margin was 67.7% in the previous quarter and 59.5% in the same period a year earlier. Net profit margin was 51.1% in the third quarter, according to the report, also declining quarter on quarter. The company compared that level with a net margin of 55.6% in the previous quarter, as revenue rose between the periods. Net margin remained above its year-earlier level of 45.7%, with the company recording annual improvement in both profit margins despite their quarterly declines.

For the fourth quarter of 2026, management forecast revenue of between $52.3 billion and $54.3 billion, according to the presentation filed with the U.S. Securities and Exchange Commission. In the same presentation, the company forecast full-year revenue growth of about 44% in U.S. dollar terms from the previous year. It projected a fourth-quarter gross margin range of 65.0% to 67.0%, according to its quarterly earnings page. It also forecast an operating margin of between 56.5% and 58.5% for the same period. During the earnings call, it confirmed a 2026 capital expenditure budget of between $60 billion and $64 billion. The company's financial calendar set November 10, 2026, as the date for releasing October sales, its next monthly performance disclosure.