TSMC Third-Quarter Profit Jumps 68.7% as 2-Nanometer Chips Reach 8% of Sales

Taiwan Semiconductor Manufacturing Co. said on October 15 that net income for the July–September quarter rose 68.7% from a year earlier to NT$763.06 billion, on revenue of NT$1,494.24 billion.

The numbers

Revenue was up 50.9% year over year in Taiwan dollars and 17.6% from the second quarter. In U.S. dollars, TSMC put revenue at $46.72 billion, up 41.2% from a year earlier. Diluted earnings per share were NT$29.43, or US$4.60 per ADR.

• Gross margin: 66.4%
• Operating margin: 58.7%
• Net profit margin: 51.1%

Process mix

Chips made on 2-nanometer technology accounted for 8% of wafer revenue in the quarter. The other leading nodes broke down as follows:

• 3nm: 33%
• 5nm: 28%
• 7nm: 10%

Together, 7nm and more advanced processes made up 79% of wafer revenue.

Fourth-quarter guidance

TSMC expects revenue of $52.3 billion to $54.3 billion in the fourth quarter, with a gross margin of 65% to 67% and an operating margin of 56.5% to 58.5%. The guidance assumes an exchange rate of 31.8 Taiwan dollars to the U.S. dollar.

Chief Financial Officer Wendell Huang said third-quarter business was "supported by strong demand for our leading-edge process technologies." He said the company expects the fourth quarter to be supported by continued demand for those nodes, including what he called "the steep ramp-up of our 2-nanometer technology."

Context

TSMC manufactures chips for many of the largest AI and device companies, so its quarterly results are widely read as a gauge of demand across the industry. The 2-nanometer share of sales is the first time the node has appeared as a meaningful slice of the mix in the company's reporting this year, and the company's fourth-quarter outlook points to further growth as that ramp continues. Earlier this month TSMC reported September revenue, and its capital spending plans were not part of the earnings release.