TSMC makes record sales and does not believe in bursting AI bubble

TSMC generated sales of a good $33 billion in the third quarter of 2025, slightly exceeding its self-imposed forecast. Compared to the previous quarter, sales increased by a good ten percent. Operating and net profit increased even more strongly to a good 16.7 billion (+ 12 percent) and 15.1 billion US dollars (+ 18 percent) respectively.

The growth comes mainly from the production of AI chips, for example for Nvidia and AMD. TSMC is continuously expanding its manufacturing capacity, but at the same time is also expected to charge higher prices. This increases the margin, which explains the disproportionately strong profit. TSMC’s operating margin is according to the annual report now at 50.6 percent, the gross margin at 59.5 percent.

3 nanometers stagnated

In particular, the AI accelerators for data centers are keeping TSMC’s sales of 5-nanometer technology high. It continues to account for more than a third of sales. TSMC counts slightly improved 4nm offshoots such as N4 and N4P as part of the 5nm generation and thus also Nvidia’s Blackwell GPUs and AMD’s Instinct MI300 series.

3 nm chips, for example for Apple and Mediatek, are stagnating at less than a quarter of sales. 2 nm offshoots do not appear in the annual report so far.

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No bursting AI bubble in sight

In the analysts’ conference on the annual report, TSMC CEO C.C. Wei already assured a rosy outlook for 2026. The chip contract manufacturer does not expect the AI hype to subside so far.

“The demand for AI is actually still very strong, even stronger than we would have thought three months ago,” Wei said. “We are also pleased about the continued good prospects of our customers. In addition, we have directly received very strong signals from our customers’ customers requesting capacity to support.”

Meanwhile, the stock market seems to be hung up on the short-term outlook: In the current fourth quarter, TSMC expects sales of 32.2 to 33.4 billion US dollars. In the worst case, this corresponds to a slight decline, in the best case minimal growth. TSMC’s stock fell by about three percent after the announcement of the business figures.