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TSMC's AI Chip Boom: Third-Quarter Profit Soars 40% to $9.27 Billion

The AI boom is here to stay as another feather in its hat is added with Taiwan’s TSMC reporting

a 40% profit in its Q3 earnings report. Taiwan Semiconductor Manufacturing Co, the world's biggest contract chipmaker, is expected to report a whopping 40 per cent surge in third-quarter profit. The announcement is likely to reflect widespread demand for high-end chips that are increasingly applied in artificial intelligence devices. TSMC is the house of chips for tech giants such as Apple and Nvidia, which have witnessed sharp growth amid a global shift to AI technologies.

Analysts forecast TSMC to report a net profit of T$298.2 billion, or $9.27 billion, in the quarter as earnings season picked up pace in Taiwan and the rest of Asia. That's the estimate compiled from 22 analysts by LSEG SmartEstimate, which is a sharp gain from the T$211 billion net profit reported in the same period a year ago. That document which carried a higher weightage for this number came directly from the most accurate among them.

Announcing the Q3 reports, Li Fang-kuo, chairman of President Capital Management said, “Most of TSMC’s major clients, including Apple, Nvidia, AMD, Qualcomm, and Mediatek, are launching new products which heavily rely on TSMC’s advanced process technologies.” He further added, “TSMC’s Q3 earnings will exceed expectations by a lot.”

With TSMC’s 40% growth at hand, it is set to beat market records and showcase its revenue outlook in US dollars at its earnings conference on October 18. According to industry experts, TSMC’s exponential growth is marked by the soaring demand for advanced chip production, critical to powering AI applications and devices. This surge in demand comes as the company races to expand production to meet the needs of its major clients like Apple, Nvidia, and MediaTek among others.

The chipmaker has been investing heavily in its expansion plans. Right now, it spends billions on manufacturing facilities overseas. This includes the firm's $65 billion investment in three plants in the U.S. state of Arizona. Yet the company has explicitly announced that most of its production will remain in Taiwan.

On its July call to report earnings, TSMC boosted the annual revenue guidance and revised its capital expenditure plan. As of now, management anticipates capital expenditures to be in the range of $30 billion to $32 billion, up from a previous estimate in the range of $28 billion to $32 billion.

TSMC's shares have surged 77% so far this year through yesterday, leaving the broader market in the dust. The S&P 500 has risen 28%. The boom in AI has driven TSMC's stock ever higher, making it Asia's most valuable firm.