TSMC Posts Record Net Profit of NT$763.06 Billion in Third Quarter
Key Facts
Taiwan Semiconductor Manufacturing Co. (TSMC) said on October 15 that net income reached NT$763.06 billion in the third quarter ended September 30, with revenue of NT$1,494.24 billion and diluted earnings per share of NT$29.43. Results showed revenue growth of 50.9% year over year, while net income and earnings per share rose 68.7% year over year. Compared with the second quarter, revenue increased 17.6% and net income rose 8.0%. In U.S. dollars, revenue was $46.72 billion, up 41.2% from the year-earlier period and 16.2% from the previous quarter, according to the company’s filing with the U.S. Securities and Exchange Commission. Net income exceeded analysts’ estimate of NT$746.3 billion, according to an LSEG estimate cited by Reuters via Investing.com.
Despite earnings growth, gross margin fell 1.3 percentage points from the previous quarter to 66.4%. The company attributed the decline mainly to margin dilution as it began ramping up 2-nanometer production, according to the earnings call transcript published by The Motley Fool. Management said the margin “decreased 1.3 percentage points sequentially to 66.4%, mainly due to margin dilution from the ramp-up of 2-nanometer production.” The decline puts the cost of expanding the new technology alongside revenue and profit growth in the quarter’s results. Company data showed that 2-, 3-, 5- and 7-nanometer technologies together accounted for 79% of total wafer revenue, while 2-nanometer alone accounted for 8%.
High-performance computing remained the largest disclosed revenue driver by platform, accounting for 68% of third-quarter revenue after growing 22% from the second quarter. The company said on its earnings call that revenue from the business “increased 22% sequentially to account for 68% of our third-quarter revenue.” Management linked the results to demand for its advanced technologies as it continued to expand production of its latest-generation chips. In an interview reported by the Associated Press, the chairman and chief executive said demand for AI chips “remains far above our current ability to supply, and we are working hard to narrow the gap.” Management’s comments thus brought together strong demand and the constraints imposed by current supply capacity as the 2-nanometer production ramp advances.
The company kept its 2026 capital expenditure budget within a range of $60 billion to $64 billion, according to the earnings call transcript. It said it expects capital investments between 2026 and 2028 to be much higher than those of the previous three years. This investment trajectory comes alongside the 2-nanometer production ramp and the company’s statement that it is working to narrow the gap between demand for AI chips and its ability to supply them. Meanwhile, the chief executive said consumer and price-sensitive sectors face challenges from higher component prices and economic uncertainty. He added that the company “has taken a cautious approach in planning its business going into 2027,” according to the Associated Press.
Management expects fourth-quarter revenue of between $52.3 billion and $54.3 billion, gross margin of between 65% and 67%, and operating margin of between 56.5% and 58.5%, according to the filing. The company said it expects activity to continue to be supported by strong demand for advanced manufacturing technologies, “including the sharp increase in 2-nanometer production.” The guidance sets out management’s outlook for the coming period after third-quarter revenue of $46.72 billion, with the projected gross margin range remaining below the third-quarter level of 66.4% at its lower end. The next date on the company’s calendar is the release of October sales on November 10, 2026. The data will be the first subsequent monthly reading among the dates listed on the investor relations calendar.
In share trading, EL7 data showed TSMC closing at $417.04999 on October 23, compared with a close of $412.35 on October 22. The comparison between the two closes indicates the price rose that day and does not support describing the share’s move as a decline. Trading after the earnings announcement looked different on October 15: Investing.com reported that the stock stood at $417.64 at 12:22 p.m. Eastern Time, down 2.88% during the session. The stock was down 8.77% over the previous week through that date, according to the same report. These readings place post-results trading in a defined time context, without conflating October 15 trading with the October 23 close.