Q3 net profit may rise by 65%! TSMC (TSM.US) is expected to achieve its sixth consecutive profit win, as the AI infrastructure boom continues

According to Jinse Finance APP, driven by a surge in technology sector infrastructure spending, the world's largest advanced AI chip manufacturer, TSMC, is expected to report a record profit for the sixth consecutive quarter.

Analysts state that market demand for TSMC's AI chip manufacturing capacity and its advanced chip packaging technology, CoWoS, remains strong. This has pushed the market value of Asia's most valuable company—a key supplier to Nvidia and Apple—to new heights. Its current market capitalization is about $2.1 trillion, nearly double that of its South Korean competitor, Samsung Electronics.

According to LSEG SmartEstimate, which compiles estimates from 16 analysts, TSMC is expected to announce a 65% surge in third-quarter net profit to TWD 746.3 billion ($23.4 billion USD) on Thursday. The estimate emphasizes analysts with a proven track record for accuracy. TSMC will hold a financial results conference call at 06:00 GMT (14:00 Beijing time), during which it will provide fourth-quarter guidance and updated full-year forecasts.

If net profit exceeds TWD 706.56 billion, it will set a new quarterly net profit record for TSMC and mark the 11th consecutive quarter of profit growth. Last Thursday, TSMC reported a 50% year-over-year increase in third-quarter revenue, beating market expectations and reaching a record high.

Charlie Chan, an analyst at Morgan Stanley, said in a report on October 6 that, driven by strong demand for 3nm chips, TSMC is expected to raise its full-year revenue growth forecast from “over 40%” to the lower-to-mid-40% range.

Prospects for Expansion in Texas

TSMC is investing $26.5 billion to build chip factories in Arizona, USA, including an additional $10 billion investment announced in July. According to a September report, TSMC is evaluating potential investments in Texas. Last week, Tesla CEO Musk also said his company will build and operate a Terafab AI chip complex, of which TSMC may lease a portion.

Analysts expect TSMC to respond to questions about potential expansion plans in Texas. Charlie Chan noted in his report that, given growing customer demand and the limited capacity at the Arizona site after five years, an expansion in Texas may become necessary. However, Morningstar senior equity analyst Phelix Lee believes the urgency for TSMC to expand into Texas is limited since some planned wafer plants in Arizona have yet to be completed.

“Given Texas' long-standing semiconductor ecosystem and talent pool, it's a good location for an ambitious expansion in the 2030s or 2040s,” said Lee. “This could be a preemptive move to address potential US trade and other policy issues down the road.”

During the July financial results conference call, TSMC raised this year’s capital expenditure forecast from the previous higher end of the $52 billion to $56 billion range to $60 billion to $64 billion. TSMC's Taipei-listed shares have risen 63% so far this year, roughly in line with the 69% gain of the Taiwan Weighted Index.