TSMC’s third-quarter profit has a chance to soar by 40%

Taiwan’s TSMC, the world’s largest contract chip maker, is due to report third-quarter results this week. According to preliminary estimates, its net profit for the period should grow by 40% to $9.27 billion, largely due to the high demand for components for artificial intelligence systems.

Image Source: TSMC

A similar forecast is given by Reuters with reference to LSEG SmartEstimate. Last week it became known that TSMC’s revenue in the third quarter grew by 36.5% year-on-year to a record $23.62 billion. In this regard, the company’s faster growth in net profit may indicate its ability to optimally balance costs and maintain high demand for her services. As analysts surveyed by Reuters explain, in the third quarter, most TSMC clients were preparing new products to enter the market, so demand for the company’s services naturally increased.

At the same time, in order to increase production volumes, TSMC has to commission new enterprises, and this forces it to increase capital expenditures. At its last quarterly earnings call in July, TSMC raised the lower end of its current year capex range from $28 billion to $30 billion, leaving the upper limit at $32 billion. It is possible that another adjustment will be made this week to increase capital expenditures. TSMC shares have increased by 77% since the beginning of the year amid interest in its services.