TAIPEI, October 15 — Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest manufacturer of advanced chips, reported its sixth consecutive record quarterly profit on Thursday, driven by robust artificial intelligence demand, while adopting a more cautious approach to business planning for 2027 amid macroeconomic uncertainties.
Chief Executive C.C. Wei said demand for advanced chips remained extremely strong, with no signs of a slowdown in the broader AI trend. However, he warned that consumer-focused and price-sensitive markets were facing challenges from rising component costs and economic uncertainty.
Despite the cautious outlook, TSMC raised its full-year 2026 revenue growth forecast to approximately 44%, up from its previous projection of more than 40%. The company said demand continued to exceed its production capacity.
Record Profit Driven by AI Demand
TSMC reported net profit of T$763.1 billion ($23.59 billion) for the July-to-September quarter, a 69% increase from a year earlier. The result surpassed the LSEG SmartEstimate of T$746.3 billion compiled from 16 analysts.
The company recorded its highest-ever quarterly net income and its 11th consecutive quarter of profit growth. Third-quarter revenue also rose 50% year over year, beating market forecasts.
TSMC expects fourth-quarter revenue to reach between $52.3 billion and $54.3 billion, representing potential growth of as much as 61% compared with the same period last year. It maintained its 2026 capital expenditure forecast at $60 billion to $64 billion.
The company also identified emerging agentic AI central processing units and continued demand for networking chips as important drivers of future semiconductor demand.
Technology Stocks Face Renewed Pressure
TSMC’s results come amid concerns about whether the massive investment in AI infrastructure can maintain its current momentum. The company’s Taipei-listed shares closed 2% lower ahead of the earnings announcement as investors reacted to a broader technology sell-off and concerns about possible US Federal Reserve rate increases.
South Korean semiconductor competitors Samsung Electronics and SK Hynix fell more than 10%.
Gary Tan, a portfolio manager at Allspring Global Investments, which owns TSMC shares, said the company’s cautious tone reflected similar comments from other semiconductor companies.
He warned that the main risk was that TSMC’s outlook could lead to broader earnings downgrades across the semiconductor supply chain. However, he characterized the company’s comments as prudent management of expectations rather than evidence of a fundamental deterioration in long-term demand.
Analysts continue to point to strong demand for TSMC’s advanced chip manufacturing and CoWoS packaging technology. The company’s market capitalization has reached approximately $2 trillion, nearly twice that of Samsung Electronics.
US Expansion and Potential Texas Investment
TSMC is investing $265 billion in semiconductor manufacturing facilities in Arizona, including an additional $100 billion announced in July.
The company said construction of its second Arizona fabrication plant had been completed, with mass production scheduled to begin in the third quarter of 2027, ahead of schedule.
TSMC is also evaluating expansion opportunities beyond Arizona as major US customers seek additional domestic manufacturing capacity.
Wei confirmed that the company had sent teams to Texas to assess potential investment opportunities, adding that the US government had been supportive of its expansion plans.
The company has also held discussions with Tesla CEO Elon Musk’s proposed Terafab AI chip complex. Wei emphasized that any manufacturing collaboration would require TSMC to operate the fabrication facility itself.
AI Chip Demand Remains a Long-Term Growth Driver
TSMC’s cautious 2027 planning reflects uncertainty over economic conditions and rising component prices, but the company’s current business outlook remains strong.
ASML, the leading supplier of equipment used to manufacture advanced semiconductors, said customers were already considering orders for 2029 and 2030, easing concerns that AI investment could be losing momentum.
TSMC shares have gained 57% so far this year, compared with a 62% rise in the broader Taiwanese market.
The company’s latest results reinforce the importance of AI-related chip demand to its growth, while its comments on 2027 highlight the need to balance strong industry opportunities with broader economic risks.
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