Key Takeaways
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- Q3 net profit NT$452.3B (US$14.8B), +39% YoY, beating NT$410.6B consensus; revenue NT$989.9B, +30% YoY, in line with guidance.
- Shares hit a record NT$1,485 pre-earnings; up ~40% YTD on AI/HPC demand strength.
- AI-led capex by Nvidia, OpenAI, and U.S. tech giants continues to drive advanced-node utilization; TSMC remains key beneficiary.
- Policy overhangs: existing 20% tariff on U.S.-bound goods; threatened 100% U.S. tariff with potential exemptions for U.S. manufacturing commitments; U.S. push for onshore capacity.
- TSMC accelerating Arizona buildout; pledged $165B U.S. investment amid chatter of a “50-50” U.S.–Taiwan production split proposal, which Taiwan officials reject.
What happened?
TSMC delivered another record quarter, with profit up 39% YoY and revenue up 30% YoY, supported by unrelenting demand for AI and high-performance compute chips. EUV-heavy, advanced-node mix and tight leading-edge capacity underpinned margins and earnings outperformance versus consensus. The stock rallied into the print, reflecting investor confidence in the durability of AI capex cycles from hyperscalers and model developers.
Why it matters
Results reinforce the thesis that AI remains a multi-year growth engine for semis, with TSMC at the center of 3nm/2nm roadmaps for leading customers. Strength at advanced nodes supports pricing power and margin resilience. However, geopolitics and industrial policy remain key swing factors: tariff regimes, U.S. onshoring incentives/requirements, and potential exemptions tied to U.S. manufacturing could reshape TSMC’s geographic mix, capex allocation, and cost structure.
What’s next?
Near term, watch guidance color on advanced-node capacity ramps (N3/N2), Arizona timelines, and customer demand visibility into 2026. Policy watch items include any formalization of U.S. tariff increases, scope of exemptions for U.S.-committed production, and practical implications of proposals to rebalance production between Taiwan and the U.S. For investors, the base case remains sustained AI-driven orders with policy risk around China/U.S. trade and the costs/returns of accelerated U.S. capex.
