TSMC's profit jumps 68.7% and it guides Q4 higher

The money for AI chips is still arriving at the foundry. TSMC's guide says it keeps arriving through year end.

TSMC reported third-quarter revenue of NT$1,494.24 billion, or US$46.72 billion, on Oct. 15. That is up 41.2% from a year earlier in dollars, and 50.9% in New Taiwan dollars.

Net income rose 68.7% to NT$763.06 billion.

The numbers behind the jump

Diluted earnings came to NT$29.43 a share, or US$4.60 per ADR unit, the company says. Gross margin was 66.4%, operating margin 58.7% and net margin 51.1%.

In dollars, revenue rose 16.2% from the second quarter. Net income rose 8.0% over the same stretch.

The mix shows where the money is. Chips made at 3 nanometers brought in 33% of wafer revenue, 5 nanometers 28% and the newest 2-nanometer process 8%. Everything at 7 nanometers and below added up to 79%.

For the fourth quarter, TSMC guides revenue to US$52.3 billion to US$54.3 billion, with gross margin of 65% to 67% and operating margin of 56.5% to 58.5%. The guide assumes 31.8 New Taiwan dollars to the U.S. dollar.

At the midpoint, that is about 14% more revenue than the quarter it just reported.

The guide is the verdict

Yes, a huge TSMC quarter has been routine for a while. The guide is what matters this time.

A company that expects to sell 14% more next quarter, at margins that barely move, is seeing orders. It is not hoping for them.

That matters because the doubt about AI has moved to the money. Investors are asking who pays for the buildout, and when. TSMC's answer, for one more quarter, is that its customers are still paying for wafers.

The 2-nanometer share is the number to keep an eye on. At 8% it is small. As it climbs, the newest generation of chips is reaching volume.

What it means for you

You do not buy wafers. You buy tokens and GPU hours, and those prices sit downstream of this supply.

More leading-edge capacity, sold at steady margins, means the chips keep coming. It does not, on its own, mean cheaper chips.

A 66.4% gross margin says TSMC sets its price. The savings you see on model prices come from somewhere further down the stack: better chip designs, better inference software, and labs competing for your usage.

If you are planning compute for next year, this report points one way. Supply of advanced silicon is still growing, and the company making it is in no hurry to discount.

What to watch

The fourth-quarter range. If TSMC lands inside US$52.3 billion to US$54.3 billion, the buildout ran all year without a pause at the bottom of the stack.

Then the 2-nanometer share in January's report.

Ignore the stock chart for a day. Watch the wafers.