Taiwan Semiconductor Manufacturing will report earnings before the U.S. market opens on Thursday. Attention will be on whether the chip manufacturer is ready to make another big American investment.
TSMC is making a habit of reporting record figures as it benefits from the artificial-intelligence boom. The company is the main supplier of chips to Nvidia, the leading designer of semiconductors for AI applications. TSMC also makes processors for Apple, Advanced Micro Devices and Broadcom.
Monthly sales disclosures have already shown TSMC's third-quarter revenue rose 51% to 1.49 trillion New Taiwan dollars ($46.7 billion), ahead of previous expectations. TSMC has forecast 2026 revenue to grow by over 40%
The Taiwanese company's quarterly net profit likely surged 63% from a year earlier to NT$736.92 billion, according to a FactSet poll.
Eyes will be on whether TSMC confirms plans to build a second American manufacturing hub in Texas, as previously reported by Reuters and Taiwanese media. Speculation has been fueled by comments from Elon Musk that he has been in talks with TSMC over his Terafab operation -- designed to make chips for Tesla and SpaceX -- with potential for subleasing part of the site.
Any such expansion would be yet another major commitment for TSMC, which has already pledged $265 billion in U.S. investment, largely due to expansion of its Arizona semiconductor fabrication project. It could also force another hike to capital expenditure, which TSMC has forecast in a range of $60 billion to $64 billion for this year.
TSMC is looking to fend off a challenge from Intel, which has received U.S. government backing. Intel currently pays TSMC to make some of its own wafers. However, Intel -- which was a recent Barron's stock pick -- is hoping to attract major customers to its own manufacturing services.
"We would look for management's perspective on the evolving competitive landscape, including Intel...and Terafab, and the implications for TSMC's longer-term positioning," Goldman Sachs analyst Evelyn Yu wrote in a research note ahead of the earnings report. "In particular, we would welcome further discussion of its technology leadership, and whether management expects this gap to widen or narrow across coming process generations."
American depositary receipts of TSMC were down 1.9% on Wednesday, having risen 46% this year through Tuesday's close.