TSMC expected to report sixth straight quarter of record profit thanks to AI boom

TAIPEI: TSMC, the world’s largest manufacturer of advanced AI chips, will likely report a sixth consecutive ‌quarter of record earnings, driven by booming infrastructure spending in the tech sector.

Analysts say demand for Taiwan Semiconductor Manufacturing Co’s (TSMC) AI chipmaking capacity, as well as its advanced chip packaging technology, CoWoS, remains strong.

That has catapulted Asia’s most valuable company, a key supplier to Nvidia and ​Apple, to new heights. Its market capitalisation is almost double that of South Korean rival Samsung Electronics at ​around $2.1 trillion.

On Thursday, TSMC is expected to report a 65% surge in third-quarter net profit to ⁠T$746.3 billion ($23.4 billion), according to an LSEG SmartEstimate compiled from 16 analysts.

SmartEstimates place greater weight on forecasts from ​analysts who are more consistently accurate.

An earnings call at which it will provide fourth-quarter and updated full-year guidance is scheduled ​for 0600 GMT.

Any result above T$706.56 billion would mark the company’s highest-ever quarterly net income, as well as its 11th consecutive quarter of profit growth.

Last Thursday, it posted a 50% year-on-year rise in third-quarter revenue, beating market forecasts and hitting a new record high.

In an October 6 report, ​Morgan Stanley analyst Charlie Chan said he expected TSMC to raise its full-year revenue growth forecast to the low-to-mid ​40% range from its current guidance of more than 40%, driven by strong demand for its 3-nanometre chips.

Texas expansion prospects

TSMC is investing $265 billion ‌to ⁠build chip factories in the US state of Arizona, including an additional $100 billion that was unveiled in July.

In September, Reuters reported that TSMC was evaluating a potential investment in Texas. Tesla CEO Elon Musk also said last week that his companies would build and operate the Terafab AI chip complex, with TSMC potentially subleasing a part of it.

Analysts expect TSMC to address questions ​about its potential expansion plans ​in Texas.

In his report, Chan ⁠said an expansion in Texas could become necessary given growing customer demand and limited space at TSMC’s Arizona site in five years’ time.

Phelix Lee, senior equity analyst at Morningstar, however, ​saw limited urgency for TSMC to expand into Texas, given that some of its ​planned fabs in ⁠Arizona have yet to be built.

“Texas is a good location for a 2030s or 2040s expansion grand plan, given its long history of semiconductor ecosystem and talent pool,” Lee said. “It may be a dangling carrot to preempt potential US trade and other policies.”

On ⁠its ​July earnings call, the company raised its capex forecast for this year to ​between $60 billion and $64 billion from a previous prediction at the high end of $52 billion to $56 billion.

TSMC’s Taipei-listed shares have gained 63% so far this year, ​broadly in line with a 69% rise for the broader market.