In this photo image, a TSMC logo is displayed on a smartphone screen.
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Taiwan Semiconductor Manufacturing Company on Thursday reported a 54 percent rise in net profit in the third quarter and forecast a year-on-year rise in revenue in the final three months of the year, as global chipmakers continue to benefit from demand fueled by artificial intelligence applications.
The company’s net income was NT$325.3 billion ($10.1 billion) in the July-September quarter, beating LSEG’s estimate of NT$300.2 billion reported by Reuters.
U.S.-listed stocks were up 9% as of 9:09 a.m. ET during premarket trading.
TSMC is the world’s largest producer of advanced chips, serving customers such as Apple and Nvidia.
Net income was $23.5 billion in the third quarter, up 36% year over year, with TSMC’s gross margin rising to 57.8% in the July-September period, compared with 54.3% in corresponding period of the previous year.
“Based on the current business outlook, we expect our fourth quarter revenue to be between $26.1 billion and $26.9 billion, representing 13% sequential growth or 35% year-over-year growth at the interim point TSMC Chief Financial said. CEO Wendell Huang said during an earnings call after the results were announced, according to a call transcript obtained by FactSet.
In the third quarter, “our business was supported by strong smartphone and AI demand for our industry-leading 3nm and 5nm technologies,” TSMC said in a statement, referring to its semiconductor hubs.
On Thursday’s earnings call, TSMC Chairman and CEO CC Wei emphasized that AI demand is “real” and that the company has seen the “deepest and broadest growth of anyone in this industry” as a result.
“We’ve been talking to our customers all the time, including hyperscale customers who build their own chips. And almost every AI innovator works with TSMC,” he said.
The Taipei-listed company’s shares have soared nearly 80% year-to-date, beating the 28.57% gain of wider market during the same period.
TSMC now expects its capital spending for this year to come in slightly higher than $30 billion, it said during its earnings call. The company’s cost of capital rose to $6.4 billion in the third quarter, up from $6.36 billion in the previous three months.
The Taiwanese chipmaker, whose advanced chips are vital to a range of products ranging from smartphones to artificial intelligence applications, has increased its global manufacturing footprint with a massive overseas investment $65 billion for three chip factories in Arizona to meet US demand, as well as opening its first factory in Japan earlier this year.
TSMC’s earnings come in the same week as the Netherlands ASMLwhich supplies machinery to the Taiwanese company, issued a lower-than-expected net sales forecast, sending shares lower.
Some market participants have questioned the long-term durability of the AI boom and the return on growing investment in the technology — while Young Liu, CEO and chairman of key Apple supplier Foxconn, told CNBC last week that the frenzy of artificial intelligence “still has some time to go”, as advanced language models evolve with each new iteration.
Correction: This article has been updated to accurately reflect that TSMC’s third-quarter net profit came in at NT$325.3 billion.