Key takeaways
- TSMC reported record Q3 2026 results, with net profit surging 68.7% year-over-year to NT$763.06 billion
- Booming AI chip demand remained the main growth driver, with high-performance computing accounting for 68% of quarterly revenue
- TSMC raised its 2026 growth outlook and expects strong momentum to continue
Taiwan Semiconductor Manufacturing Company (TSMC) reported record-breaking third-quarter 2026 earnings on Thursday as booming demand for artificial intelligence (AI) chips pushed revenue and profits to new highs.
The world's largest contract chipmaker reported a 68.7% year-over-year increase in net profit to NT$763.06 billion (approximately $23.6 billion), comfortably exceeding analysts' expectations of NT$746.3 billion.
(Source: TSMC)
TSMC Q3 Revenue Surges 51% as Earnings Beat Forecasts
TSMC generated NT$1.49 trillion in third-quarter revenue, which is a 50.9% increase from the same period last year. In US dollar terms, revenue reached $46.72 billion, up 41.2% year-over-year.
The company also reported diluted earnings per share (EPS) of NT$29.43, equivalent to $4.60 per American depositary receipt, compared to NT$17.44 a year earlier. Revenue increased 17.6% quarter-over-quarter in Taiwan dollar terms, while net profit climbed 8%.
TSMC's gross margin reached 66.4%, down from 67.7% in the previous quarter. This was largely due to the costs associated with ramping up its advanced 2-nanometer manufacturing technology.
Meanwhile, its operating margin stood at 58.7%, with a net profit margin of 51.1%.
AI Chip Boom Drives TSMC's Record-Breaking Quarter
Strong demand for advanced processors used in AI infrastructure was a major driver of TSMC's performance. High-performance computing, which includes AI-related applications, accounted for 68% of quarterly revenue, and increased 22% from the previous quarter.
Interestingly, TSMC's newest 2-nanometer technology accounted for 8% of wafer revenue, compared to just 3% in the second quarter.
During the earnings call, CEO C.C. Wei described AI demand as "extremely robust" and said the company had seen no signs of slowing growth.
TSMC Raises 2026 Outlook Despite Semiconductor Stock Selloff
Looking ahead, TSMC expects fourth-quarter revenue between $52.3 billion and $54.3 billion. This represents approximately 58% annual growth at the midpoint. The company also anticipates full-year 2026 revenue growth of approximately 44% in US dollar terms, supported by continued AI infrastructure spending.
TSMC maintained its annual capital expenditure forecast of $60 billion to $64 billion as it expands manufacturing capacity.
However, investors reacted cautiously despite the strong results. TSMC shares closed approximately 2% lower in Taiwan on Thursday, while its US-listed shares fell around 1.5% in premarket trading.
Nevertheless, TSMC's record earnings and upbeat guidance suggest that demand for advanced chips remains strong heading into 2027.
