Dollar sales in the third quarter increased by 41.2% compared to the previous year... 2-nano wafer sales share of 8%, facility investment maintained at $60 billion to $64 billion this year… On the day of earnings announcement, US ADR fell 1.80%
TSMC is raising its growth outlook for this year and plans to expand 2-nano production based on strong demand for advanced processes. While the sales contribution of high-performance computing (HPC) business and new processes is increasing, initial mass production costs have been a burden on profit margins. On the day of the earnings announcement, TSMC's stock depository receipt (ADR) closed lower in the U.S. stock market.
According to Taiwan's Economic Daily on the 15th, TSMC Chairman Wei Zizha predicted that this year's dollar-based sales will increase by about 44% compared to the previous year at the third quarter performance briefing. The forecast was raised from 'growth slightly exceeding 40%' presented last quarter.
TSMC's third quarter dollar-based sales were $46.72 billion, up 41.2% from the same period last year and 16.2% from the previous quarter. Net profit was NT$763.06 billion, up 68.7% from the same period last year, and diluted earnings per share were NT$29.43.
By business, HPC sales increased 22% from the previous quarter, accounting for 68% of total sales. By process, the share of 2nm in wafer sales increased from 3% in the second quarter to 8% in the third quarter. The proportion of 3 nanometers was 33%, and the combined proportion of advanced processes of 7 nanometers and lower reached 79%.
An expansion plan was also presented. The Economic Daily reported that TSMC expected to expand its annual production capacity of the 2-nano series in 2027 to more than double this year's level. A 3-nano factory will be added in Tainan, Taiwan, and mass production will be promoted in the first half of 2028.
According to Taiwan's Central News Agency, TSMC maintained this year's facility investment budget at $60 billion to $64 billion presented in July. The scale of facility investment between 2026 and 2028 is expected to increase significantly compared to the previous three years.
The costs of the production expansion process were reflected in profitability indicators. The gross profit ratio in the third quarter was 66.4%, down 1.3 percentage points from the previous quarter. In its management report, TSMC explained the burden of initial 2-nano mass production as the main cause. This is 6.9% points higher than the same period last year.
TSMC presented its fourth quarter gross profit margin forecast at 65-67%. Sales were expected to be between $52.3 billion and $54.3 billion, and if calculated based on the median of $53.3 billion, it is an increase of about 14.1% compared to the third quarter. The company predicted that demand for advanced processes and expansion of 2-nano production would support sales in the fourth quarter.
The reaction of the U.S. stock market was mixed with earnings growth. On the 15th (US local time) at the New York Stock Exchange, TSMC ADR (stock code TSM) closed regular trading at $422.25, down $7.75 (1.80%) from the previous trading day. The semiconductor industry also showed weakness, with the Philadelphia Semiconductor Index falling 0.88%, recording a downward trend for 7 consecutive trading days.
