Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, delivered third-quarter results that surpassed expectations, powered by sustained demand for advanced semiconductors used in artificial intelligence infrastructure. Net profit rose 68.7 percent from a year earlier to NT$763.06 billion, or roughly $23.6 billion, while revenue reached $46.72 billion.

Revenue climbed 41.2 percent year over year and 16.2 percent from the prior quarter. In local-currency terms, sales totaled NT$1.49 trillion, a 50.9 percent increase. The figures exceeded the company’s earlier projection of $44.6 billion to $45.8 billion and beat analyst estimates by about $1.02 billion. Diluted earnings per share came in at NT$29.43, equal to $4.60 per American depositary receipt and $0.09 above forecasts.

Margins and Technology Mix

Gross margin stood at 66.4 percent, operating margin at 58.7 percent and net margin at 51.1 percent. The sequential decline in gross margin from 67.7 percent reflected costs tied to the ramp-up of 2-nanometer production. That newest process node contributed 8 percent of wafer revenue in the quarter, up from 3 percent in the second quarter. The 3-nanometer node accounted for 33 percent, the largest single share, while 5-nanometer processes supplied 28 percent. Combined, the 2-, 3-, 5- and 7-nanometer nodes represented 79 percent of wafer sales.

High-performance computing, which encompasses AI-related applications, generated 68 percent of total revenue, rising 22 percent from the previous quarter. The segment’s contribution had been 66 percent in the second quarter and 57 percent a year earlier.

Raised Outlook and Capacity Plans

Management raised its full-year 2026 revenue growth forecast to approximately 44 percent in U.S. dollar terms, up from a previous expectation of growth slightly above 40 percent. For the fourth quarter, the company projected revenue between $52.3 billion and $54.3 billion, implying about 58 percent year-over-year growth at the midpoint. Gross margin is expected in the 65 percent to 67 percent range and operating margin between 56.5 percent and 58.8 percent.

Capital expenditure guidance for 2026 remains $60 billion to $64 billion. TSMC is advancing construction and equipment installation at roughly 20 manufacturing sites simultaneously, a significant increase from its earlier pattern of four or five new plants at a time.

Despite the strong results and higher guidance, TSMC shares closed approximately 2 percent lower in Taiwan trading, while U.S.-listed shares fell about 1.5 percent in premarket activity.

The quarter’s performance provided a clear indication of ongoing strength in demand for leading-edge process technology, particularly for high-performance computing applications that support AI systems.