Rising investment in AI infrastructure continues to boost demand for advanced chips, putting Taiwan Semiconductor Manufacturing Co. (TSMC) on track to report its 6th consecutive quarter of record profit.
Analysts expect strong demand for AI chip manufacturing capacity and TSMC’s advanced chip packaging technology, known as CoWoS, to support its earnings. The company is a key supplier to Nvidia and Apple and has reached a market capitalisation of around $2.1 trillion, nearly twice that of South Korean rival Samsung Electronics.
TSMC is expected to report a 65% year-on-year increase in third-quarter net profit to T$746.3 billion ($23.4 billion) on Thursday, according to an LSEG SmartEstimate based on forecasts from 16 analysts. The estimate gives greater weight to analysts with a stronger record of accurate predictions.
Any profit above T$706.56 billion would set a new quarterly record and mark the company’s 11th consecutive quarter of profit growth. Last Thursday, TSMC reported a 50% year-on-year rise in third-quarter revenue, beating market forecasts and reaching a new high. Its earnings call is scheduled for 0600 GMT, when it will provide fourth-quarter and updated full-year guidance.
Morgan Stanley analyst Charlie Chan expects TSMC to raise its full-year revenue growth forecast to the low-to-mid 40% range from its current guidance of more than 40%, supported by demand for 3-nanometre chips.
US expansion plans draw attention
TSMC is investing $265 billion in chip factories in Arizona, including an additional $100 billion announced in July. In September, a report said the company 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, where TSMC could potentially sublease part of the facility.
Chan said Texas expansion could become necessary within 5 years due to rising customer demand and limited space at the Arizona site. However, Morningstar senior equity analyst Phelix Lee sees limited urgency because some planned Arizona factories are 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.”
In July, TSMC raised its capital expenditure forecast for this year to $60 billion–$64 billion, up from an earlier range of $52 billion–$56 billion.
TSMC shares listed in Taipei have gained 63% so far this year, broadly tracking the wider market’s 69% rise.
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