Taiwan Semiconductor Manufacturing Company (TSMC) reported a 54% increase in net profit in its third quarter, reaching NT$325.26 billion $10.1 billion).
The chipmaking giant’s revenue rose by 36% year-on-year, totalling US$23.5 billion, driven by strong demand for artificial intelligence processors.
TSMC is the go-to chip foundry for all of the world’s leading chip designers, including Nvidia Corp, Apple Inc (NASDAQ:AAPL, ETR:APC) and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD).
Although it commands the largest portion of the global chip-manufacturing sector due to its cutting-edge technology, TSMC is not prone to cyclical industry headwinds.
Yet this is the second trading update in as many weeks (following a monthly update for September) that TSMC has managed to outstrip analysts’ forecasts.
Wedbush was particularly impressed by TSMC’s gross margin of 57.8%, smashing prior guidance of 54.5%.
Its analysts described the gross margin strength as a positive surprise, despite rising costs from increased N3 shipments at TSMC’s advanced node, which has lower margins, and higher electricity costs impacting the fourth quarter.
TSMC’s shares are up nearly 90% year to date.