TSMC CEO sees no sign of a slowdown as chip foundry reports record profit

By Nora Redmond

Company says agentic AI will spur demand

Taiwan Semiconductor Manufacturing Co.'s New York-listed shares declined by 1.5% in premarket trading.

Taiwan Semiconductor Manufacturing Co., or TSMC, posted a record quarter for profit as demand for artificial-intelligence infrastructure continued to surge, with Chairman and CEO C.C. Wei saying there was no sign of a "slowdown."

For the fourth quarter, Wendell Huang, chief financial officer at the world's largest contract semiconductor foundry, told investors in the company's earnings call on Thursday that it expects revenue to reach between $52.3 billion and $54.3 billion, representing a 58% year-on-year increase at the mid-point. Analysts saw revenue in the quarter climbing to about $51.18 billion, using the company's specified exchange rate.

He said gross margin is forecast to come in at between 65% and 67%, based on current exchange rates.

Wei said in the call that revenue growth of 44% in dollar terms is anticipated for the full year of 2026, citing "extremely robust" demand. "And we did not see any sign of slowdown," he said

Wei added that this was supported by a differentiation in technology products and a broader customer base. The company previously said it was expecting revenue growth of slightly over 40%.

"The AI market continues to be very strong. Recent developments are very positive to AI's long-term demand outlook. We observe increasing AI demand fueled by the rising adoption of agentic AI as we transition from chatbot to AI assistance," he added.

The 39-year-old-company reported net profits of 763.34 Taiwanese new dollars in the third quarter, or $23.87 billion based on the company's calculations, marking a year-on-year jump of 51% and higher than analysts' estimates of 763.1 Taiwanese new dollars, according to the London Stock Exchange Group.

TSMC maintained its capital-expenditure expectation of $60 billion to $64 billion for 2026. However, Huang said the company is predicting "significantly higher" spending on AI from 2026 to 2028 than in the past three years.

Sean Johnstone, of Goldman Sachs, wrote Thursday that the results should reassure investors "AI deployment remains on track." But bulls will have hoped for another increase in capex, he added.

TSMC's American depository receipts (TSM) fell 1.5% to $423.30 in premarket trading in New York. Its stock in Taiwan (TW:2330) closed 2% lower.

The company posted revenue for the three-month period ended September of 1.494 trillion Taiwanese new dollars ($46.72 billion), in line with reports TSMC released throughout the quarter. The figure also marks a new high and increase of 51% from a year-ago.

TSMC said in a statement on Thursday that advanced technologies, which includes its 7-nanometer tech, one of the company's fastest processes for designing chips, accounted for 79% of overall wafer revenue.

Taiwan's largest company by market capitalization, worth about $1.9 trillion, said its gross margin was 66.4%, slightly lower than 67.7% in the previous quarter.

TSMC is investing $265 billion to manufacture chip factories in Arizona, which includes an additional $100 billion the company announced in July.

The company said on the call that volume production will start in the third quarter of 2027, slightly ahead of schedule.

The New York-stock has risen by about 44% this year, with strong performance in the first half of the year as investors piled into semiconductor names, believed to benefit from the acceleration in the race to dominate in the AI industry.

However, shares have been on the decline this month along with other chip stocks on fears of inflation amid spiking energy prices and after several big tech CEOs expressed worries over the pace of the tool's development.

-Nora Redmond

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