TSMC posts record profit and raises 2026 growth forecast on AI chip demand

The Taiwanese custom semiconductor manufacturer recorded its sixth consecutive quarter of record net profit, reaching 763.06 billion Taiwanese dollars (around $23.6 billion) in the third quarter, a 68.7% increase over the same period in 2025. Revenue reached $46.72 billion, up 41.2% year-on-year in dollar terms, and gross margin hit 66.4%.

Growth forecast for 2026

During the earnings call, the company revised its annual revenue growth forecast upwards to around 44%, above its previous estimate of over 40%. For the fourth quarter, revenue is expected to be between $52.3 billion and $54.3 billion. The investment budget for next year remains in the $60 billion to $64 billion range.

Progress on 2-nanometer chips

The financial report also highlights the introduction of a new generation of manufacturing processes. 2-nanometer chips accounted for 8% of wafer revenue, while 3-nanometer technology accounted for 33%. Together, 7-nanometer and more advanced processes accounted for 79% of wafer revenue.

AI demand and challenges in the consumer market

CEO C.C. Wei said, according to Reuters, that the momentum of artificial intelligence chips coexists with pressures in price-sensitive segments due to rising component costs and macroeconomic uncertainties. “We are being prudent in planning our business for 2027,” he said. Strong demand for AI chips continues to outpace production capacity, creating opportunities for competitors seeking new contracts, but buyers still need to convert computing capacity into services they are willing to pay for.

TSMC’s financial performance, which produces components for clients such as Nvidia and Apple, reflects the transformation of these companies’ designs into physical chips, a process that requires expensive factories, specialized equipment, and years to expand production capacity.

The contrast between the dynamism of the AI sector and the challenges in the smartphone market helps explain why the expansion of artificial intelligence can occur alongside difficulties in other areas of technology.