TSMC's quarterly profit jumps 69% as 2nm chips reach customers

Taiwan Semiconductor Manufacturing Company (TSMC) said on Thursday that its net income rose 68.7% from a year earlier in the July to September quarter, on the back of strong demand for its most advanced manufacturing processes.

TSMC earned NT$763.06 billion in the third quarter, against NT$452.30 billion a year earlier. Revenue rose 50.9% to NT$1,494.24 billion, or $46.72 billion, and was up 17.6% on the previous quarter.

“Our business in the third quarter was supported by strong demand for our leading-edge process technologies,” said Wendell Huang, TSMC’s senior vice-president and chief financial officer.

Smaller chips, fatter margins

The quarter showed how quickly TSMC’s newest manufacturing process is spreading. Chips made on its 2nm technology accounted for 8% of wafer revenue. The 3nm process brought in 33%, up from 23% a year ago, and 5nm a further 28%. Taken together, processes of 7nm and below made up 79% of what the company earned from wafers.

Those advanced chips sell at a premium. TSMC’s gross margin rose to 66.4%, from 59.5% a year earlier, and its operating margin was 58.7%. More than half of every dollar of revenue, 51.1%, ended up as profit.

A bigger quarter ahead

TSMC expects the run to continue. It forecast fourth-quarter revenue of $52.3 billion to $54.3 billion, about 14% more than in the third quarter at the midpoint, with a gross margin between 65% and 67%. The guidance assumes an exchange rate of 31.8 Taiwan dollars to the US dollar.

In July the company raised this year’s capital spending budget to between $60 billion and $64 billion, saying demand for AI and high-performance computing was stronger than it had expected.

The results add to a week of strong signals from the chip supply chain. On Wednesday ASML, the Dutch company that makes the lithography machines TSMC relies on, raised its own 2026 sales forecast and said its expansion plans would not fully meet demand in 2027 and 2028.