TSMC Q3 Preview: Revenue Largely Known, Margins and Outlook Are the Test

Taiwan Semiconductor Manufacturing Co (NYSE: TSM), the world’s largest contract chipmaker, reports third-quarter results at tomorrow. It makes chips for Nvidia and Apple, and the figures land before London and Wall Street open.

The US-listed shares were quoted at $430.22 after the close today, down 3.35% from $445.12. That is about 11.7% below the early-October high of $487.47, set in the week of 5 October, though about 16% higher over six months. The shares fell with chip stocks in recent days.

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Revenue is the part investors already know. TSMC’s monthly sales for July, August and September sum to NT$1.494 trillion, about 50% more than a year earlier, with August and September both above NT$510 billion.

At the 32.0 exchange rate used in guidance, that is roughly US$46.7bn, against July guidance of US$44.6bn to US$45.8bn. This is indicative only, as the quarter’s average rate is not yet known. The $45.62bn revenue consensus probably predates September’s sales.

So attention shifts to profitability. TSMC guided third-quarter gross margin, the share of revenue left after production costs, to 65% to 67%, against 67.7% in the second quarter. It guided operating margin to 56% to 58%, against 60.3%.

Zacks’ summary of the July call says TSMC raised 2026 capital spending, the money put into plants and equipment, to $60bn to $64bn. It also expects 2026 dollar revenue growth slightly above 40%, described AI demand as extremely robust, and expects the 2nm ramp and overseas fabs to dilute margins.

Consensus expects third-quarter net profit of NT$746.3bn, about US$23.4bn, a sixth straight record and up 65% on a year earlier. Consensus is for earnings of $4.45 per ADR, the dollar-traded certificate worth five Taipei shares, against $4.31 in the second quarter.

TSMC has beaten earnings estimates in each of the last four quarters, including NT$27.25 a share in the second quarter against NT$24.23 expected. Tomorrow’s test is whether margins land inside guidance and the outlook holds.