TSMC expects AI megatrend to strengthen, as profit blows past forecasts

TAIPEI (Reuters) -TSMC, the world's biggest producer of advanced AI chips, forecast fourth-quarter revenue up by as much as 24% as it rides an AI boom that saw it post its sixth consecutive quarter of double-digit profit growth, beating estimates. TSMC said it expects robust artificial intelligence demand to continue and maintained its forecast for capital spending at up to $42 billion for 2025, although it flagged a potential business impact from U.S. trade tariffs and currency moves. The Taiwan company, whose customers include Nvidia and Apple, posted a 39.1% jump in third-quarter net profit and said it would be prudent in its business planning going into 2026. Benefiting from surging demand for advanced chips used in AI applications, Taiwan Semiconductor Manufacturing Co said net profit for July-September climbed to T$452.3 billion ($14.76 billion). That was well ahead of a T$417.7 billion LSEG SmartEstimate drawn from 20 analysts. SmartEstimates are weighted toward forecasts from analysts who are more consistently accurate. TSMC said it believes the AI boom is strengthening and demand is stronger than what it had anticipated three months ago as it forecast next year to remain healthy due to robust demand for AI-related products. Trump's trade policies and threats to put tariffs on semiconductors have created uncertainty for the global chip industry and TSMC. TSMC announced plans for a $100 billion U.S. investment with Trump at the White House in March, on top of $65 billion pledged for three plants in the state of Arizona, one of which is up and running. On Wednesday, top semiconductor equipment maker ASML, for which TSMC is a major customer, said third-quarter bookings beat market forecasts but that it expected a significant fall in demand from China next year. Samsung Electronics said on Tuesday it expected its biggest quarterly profit in over three years, also thanks to the AI boom. Taiwan-listed shares in TSMC have risen 38% so far this year, largely brushing off concerns about tariffs, and ahead of the 20% rise for the broader market. ($1 = 30.6450 Taiwan dollars) (Reporting by Wen-Yee Lee, Faith Hung and Ben Blanchard; Editing by Christopher Cushing and Muralikumar Anantharaman)

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