AI boom delivers record net profit for Taiwan's TSMC

HONG KONG

Taiwanese tech titan TSMC reported on Thursday a forecast-busting record net profit for the third quarter on skyrocketing demand for microchips used to power iPhones and artificial intelligence.

Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, has been a massive beneficiary of the frenzy in AI investment.

TSMC's clients Nvidia and Apple are among firms pouring many billions of dollars into chips, servers and data centres, fuelling concerns about a financial bubble.

TSMC said net profit for the three months to September soared 39.1 percent from a year ago to $14.7 billion.

That marked a quarterly record.

Third-quarter revenue was up 30 percent, also higher than forecasts.

TSMC's announcement follows a flare-up in trade tensions between Washington and Beijing, and concerns about U.S. export restrictions to China and possible tariffs on chips, as well as China's rare earth export curbs.

AI-related spending is soaring worldwide, and is expected to reach approximately $1.5 trillion by 2025, according to U.S research firm Gartner, and over $2 trillion in 2026, nearly two percent of global GDP.

"It's not just Apple's new iPhone driving sales. AI clients like NVIDIA and AMC are ramping up orders for high-end chips as well," Dilin Wu, research strategist at Pepperstone, told AFP.

"It shows TSMC's technology and capacity are still hard to replicate, and that underpins both margins and valuations for the company."

Looking ahead, Wu said companies "might pull forward shipments to avoid restrictions, so basically front-running the tariffs."

That would be "especially AI chip and GPU clients, certainly in the Chinese market," she said.