TSMC, the world’s largest contract chipmaker, has been a massive beneficiary of the frenzy in AI investment.
TSMC’s clients Nvidia and Apple are among firms pouring many billions of dollars into chips, servers and data centres, fuelling concerns about a financial bubble.
“AI demand actually continues to be very strong – stronger than we thought three months ago,” TSMC chairman and chief executive CC Wei told a briefing.
TSMC said net profit for the three months to September soared 39.1% from a year ago to NT$452.3 billion (US$14.7 billion), a quarterly record.
The figure beat expectations of NT$406.67 billion, according to a Bloomberg News survey of analysts.
The Q3 revenue was up 30%, also higher than forecasts.
TSMC’s announcement follows a flare-up in trade tensions between Washington and Beijing, and concerns about US export restrictions to China and possible tariffs on chips.
China’s rare earth export curbs and bid to ramp up its own chip industry has also sparked fears about the impact on AI.
Even if the Chinese market were not available to TSMC and its customers, Wei said “AI growth will be very dramatic” and “very positive”.
AI-related spending is soaring worldwide, and is expected to reach approximately US$1.5 trillion by 2025, according to US research firm Gartner, and over US$2 trillion in 2026 – nearly 2% of global GDP.
“It’s not just Apple’s new iPhone driving sales. AI clients like Nvidia and AMC are ramping up orders for high-end chips as well,” Dilin Wu, research strategist at Pepperstone, told AFP ahead of the earnings release.
“It shows TSMC’s technology and capacity are still hard to replicate, and that underpins both margins and valuations for the company.”
Looking ahead, Wu said companies “might pull forward shipments to avoid restrictions, so basically front-running the tariffs.”
That would be “especially AI chip and GPU clients, certainly in the Chinese market,” she said.
The concentration of production in Taiwan has long been seen as a “silicon shield” protecting it from an attack by China, which claims it as part of its territory — and an incentive for the US to defend it.
While TSMC plans to invest an additional US$100 billion in the US, Washington has been pressuring Taipei to shift more production to US soil.
US secretary of commerce Howard Lutnick said recently he had proposed to Taiwan a 50-50 split in chip production, which Taipei rejected.