TSMC reported a 68.7% rise in third-quarter net profit on October 15 and forecast fourth-quarter revenue of $52.3 billion to $54.3 billion. The outlook puts the Taiwanese chip manufacturer on course for another increase in sales as customers buy its most advanced manufacturing services.
Net income reached NT$763.06 billion in the three months ended September 30, compared with NT$452.30 billion a year earlier. Revenue was NT$1,494.24 billion, up 50.9%.
In US dollars, quarterly revenue increased 41.2% to $46.72 billion. Currency movements account for the gap between that growth rate and the 50.9% increase reported in New Taiwan dollars.
The result exceeded TSMC’s previous sales forecast of $44.6 billion to $45.8 billion, according to its quarterly results and guidance.
TSMC manufactures chips designed by other companies, a business known as a semiconductor foundry. Its results measure the revenue earned from making those chips, rather than sales of finished computers or phones.
Advanced chip production takes a larger share
Chief Financial Officer Wendell Huang attributed the quarter’s performance to demand for the company’s newest production processes.
“Our business in the third quarter was supported by strong demand for our leading-edge process technologies,” he said in the earnings release.
TSMC’s 2-nanometer process generated 8% of wafer revenue, up from 3% in the previous quarter. The nanometer labels identify generations of manufacturing technology; they are not a description of every feature’s physical size. Wafers are the thin semiconductor discs on which chips are manufactured.
Production using 3-nanometer, 5-nanometer and 7-nanometer processes accounted for another 71% of wafer revenue. Together with 2-nanometer production, these technologies represented 79% of the total.
High-performance computing, which covers demanding computing workloads, supplied 68% of company revenue, compared with 66% in the second quarter. Revenue from that category rose 22% from the previous quarter, the management report showed. It is a broader category than artificial intelligence alone.
Smartphone revenue rose 10% over the same period, although its share of the business fell to 21% as other sales grew faster.
New technology weighs on margins
The move to newer processes also carries costs. Gross margin, the share of revenue left after production costs, fell to 66.4% from 67.7% in the second quarter. TSMC attributed the 1.3 percentage-point decline mainly to the initial expansion of 2-nanometer production.
Capital expenditure, spending on longer-lived assets such as manufacturing equipment, totaled $13.84 billion during the quarter. That took expenditure for the first nine months of 2026 to $40.64 billion.
Our earlier coverage of TSMC’s August sales tracked the revenue acceleration before quarterly profit and margin figures were available.
For October through December, management expects gross margin of 65% to 67%, using an exchange-rate assumption of NT$31.8 per US dollar. Huang said demand for advanced processes, including increasing 2-nanometer production, should continue to support sales. The guidance remains a forecast, with both customer orders and the cost of expanding production affecting the eventual result.
