Analysis
TSMC makes chips designed by other companies, including many of the processors used for artificial intelligence, so its results are a widely watched gauge of AI hardware demand. Its fourth-quarter outlook points to continued growth, while CNBC reported that tech shares were under pressure this week on worries about AI spending.
The quarter
On October 15, 2026, TSMC reported consolidated third-quarter revenue of NT$1,494.24 billion, net income of NT$763.06 billion and diluted earnings per share of NT$29.43 (US$4.60 per ADR unit). Revenue rose 17.6% and net income 8.0% from the second quarter [1]. In US dollars, revenue was $46.72 billion, up 41.2% from a year earlier [1].
Gross margin was 66.4%, operating margin 58.7% and net profit margin 51.1% [1]. Chips built on 7-nanometer and more advanced processes made up 79% of wafer revenue; 3-nanometer accounted for 33%, 5-nanometer for 28%, 2-nanometer for 8% and 7-nanometer for 10% [1]. CNBC reported that high-performance computing was 68% of revenue and smartphones 21% [2].
The outlook
For the fourth quarter, TSMC expects revenue of US$52.3 billion to US$54.3 billion, a gross margin of 65% to 67% and an operating margin of 56.5% to 58.5%, assuming 31.8 NT dollars per US dollar [1]. Chief Financial Officer Wendell Huang said demand for leading-edge technologies remains strong, including a steep ramp of 2-nanometer production [1].
CNBC reported, citing the earnings call, that TSMC expects capital spending in 2026 to 2028 to be significantly higher than in the previous three years, and that its second Arizona fab has finished construction, with mass production expected in the third quarter of 2027, slightly ahead of the earlier schedule [2]. TSMC's release itself does not cover these points.
Reaction and context
CNBC compared TSMC's results with LSEG SmartEstimates, which it said showed revenue of NT$1.47 trillion and net income of NT$746.34 billion expected, and reported both results came in above [2]. An industry analyst told CNBC that TSMC says demand remains well above its supply capacity even after checking whether customers can finance and deploy the chips they order [2]. Separately, CNBC has reported a sell-off in AI-related chip stocks this week amid funding worries [2].
What remains uncertain
Guidance is management's forecast and can change with demand, exchange rates and supply conditions. Capital spending, Arizona timing and analyst-estimate comparisons come from CNBC's reporting, not TSMC's press release; estimates are the data provider's.