TSMC Posts Sixth Straight Record Profit
TSMC posted a sixth straight record quarter with profit up 69 percent, but shares fell on caution about 2027. Alex and Jordan unpack the AI chip giant's results.
Speaker 1: The world's most important chipmaker just posted another record quarter,
and the market's reaction was, well, complicated.
Speaker 2: You're talking about TSMC. Let's get the headline numbers first.
Speaker 1: Net profit hit 763.1 billion Taiwan dollars, about 23.6 billion U.S. dollars,
up roughly 69% from a year earlier. That beat analysts'
expectations of about 746 billion. Revenue reached 1.49 trillion Taiwan dollars,
or 46.7 billion U.S. dollars, also a record. Gross margin
was a stunning 66.4%.
Speaker 2: How many records is that now?
Speaker 1: This was TSMC's sixth consecutive quarter of record profit, and
its 11th consecutive quarter of profit growth. The company, which
is the world's largest maker of advanced chips and a
key supplier to NVIDIA and Apple... says demand is extremely
robust with no sign of a slowdown in what it
calls the AI megatrend.
Speaker 2: So why did the stock fall?
Speaker 1: Two reasons. First, the broader tech sell-off. Investors are worried
that more interest rate hikes from the Federal Reserve will
pummel AI stocks that are sensitive to higher borrowing costs.
TSMC's Taipei-listed shares closed down 2% ahead of the earnings release,
and rivals Samsung and SK Hynix slid more than 10%. Second,
TSMC struck a cautious note about 2027. What did the
chief executive say exactly? CC Way said consumer and price-sensitive
segments are being challenged by rising component prices and macroeconomic uncertainty,
and that the company is being prudent in its business
planning going into 2027. That tempered an otherwise upbeat outlook.
Speaker 2: Did they give guidance for the current quarter?
Speaker 1: Yes, and it's strong. TSMC expects fourth-quarter revenue to rise
by as much as 61% from a year earlier, to
between $ 52. 3 and $ 54. 3 billion. It maintained its capital spending
expectation for 2026 at $ 60 to $ 64 billion.
Speaker 2: What about the American expansion? That's a big political story, too.
Speaker 1: TSMC is investing $ 265 billion to build chip factories in Arizona.
Its second fab there has completed construction, with mass production
scheduled to begin in the third quarter of 2027, ahead
of schedule. And it's evaluating a potential investment in Texas.
The company is now worth around $ 2 trillion, almost double
Samsung's market value.
Speaker 2: So we have record profits, record revenue, record margins, and
a cautious tone on next year. What's the takeaway for listeners?
Speaker 1: The AI boom is still producing mountains of cash, but
the easy part of the trade may be over. TSMC
is telling the market that the AI demand story is
intact while also managing expectations for 2027. With the Fed
possibly hiking and the cost be down 20% in a week,
even the best company in semiconductors can't escape the macro storm.
It's a reminder that great earnings and great stock performance
are not the same thing.
Speaker 2: Let's put that $ 2 trillion valuation in perspective.
Speaker 1: It's staggering. TSMC is now worth almost double Samsung, and
it's Asia's most valuable company. Every major AI chip in
the world, from NVIDIA's data center monsters to Apple's phone processors,
runs through TSMC's factories. The company is struggling to meet
soaring demand, with tech giants competing for limited capacity. That
bottleneck is the whole AI economy in miniature.
Speaker 2: And the geopolitical angle? The Arizona fabs are about more
than chips. Exactly.
Speaker 1: $ 265 billion of American manufacturing is a political statement as
much as a business one. Washington wants advanced chips made
on American soil, and TSMC is delivering, with its second
Arizona fab finishing ahead of schedule. The Texas evaluation could
add even more. In a world worried about supply chains
and Taiwan, TSMC is becoming as much a geopolitical asset
as a company.