TSMC Posts Record Profit and Beats Guidance as Chip Rout Hits Shares

Taiwan Semiconductor Manufacturing (TSM), the chipmaker whose customers include Nvidia, reported a record third-quarter net profit of NT$763.06bn, up 68.7% on a year earlier. The results came before the London open today, after Wednesday’s close, so the shares have yet to react to them.

TSM closed at $430.00 yesterday, down 3.40% from $445.12, amid rate-hike fears and AI funding worries before the results were out. That leaves the stock about 11.5% below its $485.80 close on the 5th of October, while the semiconductor index has lost more than $1.5tn in six sessions.

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The profit beat the NT$746.3bn analyst estimate and gave a net margin of 51.1%. Revenue of US$46.72bn topped the company’s own guidance of US$44.6bn to US$45.8bn and the analyst consensus of US$45.62bn. In Taiwan dollar terms, revenue rose about 50%.

Earnings came to US$4.60 per American depositary receipt (ADR), against an analyst average of US$4.45 from six analysts and US$2.92 a year earlier.

High-performance computing made up 68% of revenue and smartphones 21%. The 3-nanometre process contributed 33% of wafer revenue and the newer 2-nanometre process 8%.

Gross margin was 66.4%, inside the 65% to 67% guidance and a touch under the 66.5% analysts expected. Operating margin of 58.7% beat the 56.0% to 58.0% guidance.

For the fourth quarter, TSMC guided revenue of US$52.3bn to US$54.3bn, with gross margin of 65.0% to 67.0% and operating margin of 56.5% to 58.5%, at an exchange rate of NT$31.8 to the dollar.

The bar was high going in. Kevin Net of Financiere de L Echiquier said before the results: “To get a positive share price reaction, I think we need more than just a beat.” James Ooi of Tiger Brokers said the key read-across was whether TSMC turns more bullish on the duration and scale of AI demand.

The ADR opens at 14:30 UK time today. It is the first test of whether AI chip demand can outweigh the rate fears behind the selloff.