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When Taiwan Semiconductor Manufacturing Company (TSMC) reports earnings, the entire tech world pays attention. And this Thursday’s announcement? It sent shockwaves through global markets.
The numbers tell a remarkable story. TSMC posted a third-quarter net profit of NT$452.3 billion ($14.76 billion), a staggering 39.1% jump from the previous year and 13.7% higher than the already-record quarter before it. Revenue climbed to NT$989.92 billion, crushing analyst expectations of NT$977.46 billion.
But here’s what matters more than the headline figures: TSMC just raised its full-year revenue growth forecast to the mid-30% range, up from the 30% it predicted just three months ago. The company also lifted its capital expenditure floor to $40 billion for 2025, signalling aggressive expansion plans.
The AI Engine That Won’t Quit
What’s driving this extraordinary performance? One phrase: artificial intelligence.
TSMC CEO C.C. Wei didn’t mince words on the earnings call: “AI demand actually continues to be very strong, stronger than we thought three months ago.” He emphasised that customer signals requesting capacity support have only intensified, strengthening the company’s conviction in what he calls the “AI megatrend.”
The evidence is overwhelming. TSMC’s high-performance computing division, which includes AI and 5G applications, accounted for 57% of revenue in the quarter. More tellingly, advanced chips with 7-nanometer technology or smaller represented 74% of total wafer revenue. These cutting-edge processors are the backbone of AI systems, delivering the processing power and efficiency that modern AI applications demand.
Consider TSMC’s client roster: Nvidia, AMD, Apple, and Broadcom, essentially every major player racing to build AI infrastructure. Recent mega-deals between AI firms and chipmakers, including OpenAI’s partnerships with Nvidia, AMD, and Broadcom to construct over $1 trillion in data centre capacity, point to sustained demand for years ahead.
Bubble Concerns? Not Here.
The semiconductor industry has faced mounting scepticism about whether AI investments represent genuine demand or an unsustainable bubble reminiscent of the dot-com era. Multi-billion-dollar infrastructure announcements have prompted investors to scrutinise every signal for signs of weakness.
TSMC’s results provide a definitive answer, at least for now.
“We are still very comfortable that the demand for leading-edge semiconductors is real,” Wei stated. “TSMC needs to work very hard to narrow the gap” between supply and demand, he added, indicating the company is struggling to keep pace with orders rather than chasing reluctant customers.
This sentiment echoes across the industry. Samsung Electronics reported expectations for its largest quarterly profit in over three years, also attributing growth to AI demand. ASML, the crucial semiconductor equipment supplier, posted third-quarter bookings that exceeded forecasts.
Navigating Geopolitical Headwinds
TSMC’s success story unfolds against a complex geopolitical backdrop. President Donald Trump’s trade policies and potential tariffs on semiconductors have created uncertainty for the global chip industry. The company must navigate U.S. restrictions on China, historically a significant marke,t while managing production across multiple jurisdictions.
Yet TSMC appears strategically positioned. The company announced a $100 billion U.S. investment earlier this year, complementing the $65 billion already committed to three Arizona facilities, one of which is operational. These domestic investments could insulate TSMC from some tariff impacts while strengthening its relationship with American clients and policymakers.
Wei acknowledged the uncertainty but remained confident: Even if the Chinese market became unavailable due to restrictions, “I still think the AI’s growth will be very dramatic.”
What This Means for the Tech Landscape
TSMC’s performance offers crucial insights into the technology sector’s trajectory. The company sits at the nexus of virtually every major tech trend: AI, autonomous vehicles, advanced smartphones, and high-performance computing. Its results serve as a real-time indicator of demand across these categories.
The message is unambiguous: AI infrastructure investment remains robust, and concerns about overcapacity or waning demand are premature. Companies continue placing substantial orders for advanced chips, suggesting they see genuine business cases rather than speculative positioning.
TSMC’s Taiwan-listed shares have climbed 38% this year, outpacing the broader market’s 20% gain. U.S.-listed shares rose 1.6% in pre-market trading following the earnings announcement, lifting semiconductor stocks across the board, including Nvidia and AMD.
Looking Ahead
As TSMC heads toward 2026, the company signals prudent planning while maintaining aggressive growth expectations. The commitment to $42 billion in capital spending for 2025 represents confidence that current demand patterns will persist.
The semiconductor industry faces a critical inflexion point. After years of supply constraints, capacity expansion, and surging AI investment, questions about sustainability have grown louder. TSMC’s record-breaking quarter suggests the AI revolution isn’t slowing; if anything, it’s accelerating.
For investors, policymakers, and technology companies worldwide, TSMC’s results offer a clear signal: the chips are stacked in favour of continued growth, and the AI megatrend shows no signs of exhaustion.
The question now isn’t whether AI demand is real. It’s whether the industry can scale fast enough to meet it.
Disclaimer – This article draws from sources such as the Financial Times, Bloomberg, and other reputed media houses. Please note, this blog post is intended for general educational purposes only and does not serve as an offer, recommendation, or solicitation to buy or sell any securities. It may contain forward-looking statements, and actual outcomes can vary due to numerous factors. Past performance of any security does not guarantee future results. This blog is for informational purposes only. Neither the information contained herein, nor any opinion expressed, should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives. The information and opinions contained in the report were considered by VF Securities, Inc.to be valid when published. Any person placing reliance on the blog does so entirely at his or her own risk, and does not accept any liability as a result. Securities markets may be subject to rapid and unexpected price movements, and past performance is not necessarily an indication of future performance. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding investment in securities markets. Past performance is not a guarantee of future results.
Image Source – Gemini
