Taiwan Semiconductor Manufacturing Company (TSMC) (TSM) delivered another quarter of solid growth powered by surging demand for its leading-edge process technologies. TSMC’s third-quarter results emphasized the company’s vital role in the global semiconductor ecosystem, as artificial intelligence (AI), high-performance computing (HPC), and next-generation smartphones drive structural demand for advanced chips.
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In the third quarter ended Sept. 30, total revenue surged 40.8% year-over-year to $33.1 billion. This growth was driven primarily by robust orders for the company’s 3-nanometer (N3) and 5-nanometer (N5) process technologies, which together accounted for the vast majority of wafer revenue. Gross margin increased to 59.5% due to cost savings and higher capacity utilization, while earnings per share increased 39% year over year. Advanced nodes (7-nanometer and lower) accounted for 74% of wafer revenue, confirming TSMC’s ongoing leadership in cutting-edge semiconductor production.
TSMC’s business mix reveals how AI demand is altering its revenue base. The HPC segment remained stable, accounting for 57% of overall revenue, boosted by continuous AI infrastructure expenditures. Smartphone revenue rebounded sharply, climbing 19% quarter over quarter, contributing30% to totalsales, boosted by new product releases and a comeback in device demand.
Other end markets, such as Internet of Things (IoT) and automotive, grew 20% and 18%, respectively, while traditional consumer electronics (TCE) decreased 20%, led by weakness in discretionary spending categories.
During the Q4 earnings call, CEO Dr. C.C. Wei stated that AI-related demand will remain the primary growth driver through 2025 and beyond. He claimed that “the explosive growth in token volume demonstrated increasing consumer AI model adoption, which means more and more computation is needed,” resulting in increased demand for TSMC’s most advanced nodes. Wei also noted that that enterprise AI, consumer AI, and the growing sovereign AI market are all driving long-term growth.
