Taiwan Semiconductor Manufacturing (TSMC), the world's largest manufacturer of advanced artificial intelligence chips, is expected to report a 28% year-over-year increase in third-quarter profits, reaching a record high driven by robust demand for AI infrastructure. However, U.S. tariff policies may impact the company's outlook.
TSMC shares rose nearly 5% in pre-market trading on Monday.
Taiwan Semiconductor Manufacturing, the world's leading contract chip manufacturer and a key supplier to Nvidia (NVDA) and Apple (AAPL), is projected to achieve net profits of NT$415.4 billion (approximately $13.55 billion) for the three months ending September 30, according to London Stock Exchange Group's (LSEG) SmartEstimate data, which combines forecasts from 20 analysts and assigns greater weight to more consistent analyst predictions.
TSMC previously disclosed that its third-quarter revenue growth would reach 30%, exceeding market expectations. If final net profits surpass NT$398.3 billion, it would set a new single-quarter profit record for the company while marking the seventh consecutive quarter of profit growth.
Mario Morales, Vice President at research firm International Data Corporation (IDC), stated he expects TSMC's revenue growth to reach at least 30% to 35% this year.
"Given that AI infrastructure investment is growing exponentially, and advanced chip production for leading suppliers like Nvidia and AMD relies almost exclusively on TSMC, I expect the company to continue outperforming its peers," he said.
Morales noted that despite increased uncertainty from tariffs and trade disputes, AI infrastructure remains a "strategic battleground" for cloud service providers, manufacturers, and various enterprises, ensuring continued investment concentration in this sector.
TSMC, Asia's most valuable publicly traded company with a current market capitalization of approximately $1.22 trillion—nearly three times that of South Korean competitor Samsung Electronics—is scheduled to release third-quarter earnings on Thursday and will provide fourth-quarter guidance during an earnings call at 06:00 GMT.
It remains unclear how much impact U.S. President Donald Trump's tariff policies will have on TSMC. Taiwan currently faces 20% tariffs on exports to the U.S., but semiconductors are exempt from these levies.
U.S. Commerce Secretary Howard Lutnick proposed last month that Taiwanese companies should split chip production between Taiwan and the United States in a 50:50 ratio, while currently, the vast majority of these companies' chip production is concentrated in Taiwan.
Taiwan has rejected this proposal, and TSMC has already committed to investing $165 billion in building facilities in Arizona.
Driven by optimistic prospects in the AI sector, TSMC shares have risen 30% year-to-date, largely unaffected by tariff concerns. As a heavyweight stock in Taiwan's market, TSMC's gains have also driven the Taiwan Weighted Index up 16.9% over the same period.