The company expects Q4 revenue of $52.3 billion to $54.3 billion, representing a 55% to 61% increase from the $33.73 billion recorded in Q4 2025. CFO Wendell Huang stated that the midpoint of the range implies an annual growth of 58%. Even the low end of the forecast exceeds analysts’ expectations of about $50 billion. CEO C.C. Wei also raised TSMC’s full-year outlook, forecasting 2026 revenue growth of “around 44%” in US dollar terms, up from his July estimate of “more than 40%.” He cited “extremely robust” demand for the company’s most advanced chipmaking processes.

TSMC CEO cites robust demand for Q3 boom

For the September quarter, TSMC posted net profit of NT$763.06 billion ($23.55 billion), up about 69% from a year earlier and ahead of the NT$746.3 billion that Reuters and LSEG had estimated. Revenue hit NT$1.494 trillion, or $46.72 billion, which was a gain of nearly 51% in Taiwan dollars. The quarter’s record earnings meant TSMC has had six consecutive quarters of record earnings and the 11th straight quarter of profit growth from the previous year.

Advanced technologies of 7nm and below accounted for 79% of TSMC’s wafer revenue. Its 2nm process contributed about 8%, up from 3% in the second quarter. CFO Wendell Huang attributed TSMC’s 130-basis-point decline in gross margin to 66.4% largely to the costs of ramping up 2nm production. Operating margin was 58.7%, while net margin stood at 51.1%.

TSMC expects gross margin to narrow to 65%–67% in the current quarter, with the midpoint implying a sequential decline of about 40 basis points. Huang said overseas fabs would reduce gross margin by around 2 percentage points this year, with the impact rising to 3–4 percentage points in the coming years as more US plants come online. TSMC’s US-listed shares dropped by about 1.5% in premarket trading after its Taipei-listed stock fell by 3.41% in a wider chip selloff that also involved Samsung Electronics and SK Hynix.

Analysts have stayed bullish through the volatility, though, with the mean price target on shares listed in Taipei working out to $103.68. The figure represents a 34% increase compared to the October 14 closing price of $77.35. Analyst ratings include 25 buys, nine outperform ratings, and one hold, with no sell recommendations, according to TIKR’s analysis on Yahoo Finance.

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That gain also pushed the broader Taiex index to a new high. MediaTek isn’t the only one running, as other Taiwan chip stocks like Nanya Technology and United Microelectronics are also experiencing the same fortune. But unlike those two, MediaTek is in the spotlight for shifting from plain old smartphone chips to custom AI hardware, which is exactly what big investors are hunting for now.

MediaTek gains exposure to fund managers as TSMC hits exposure limit

According to reports, fund managers aren’t suddenly in love with MediaTek just because it’s trendy. The rally experienced by TSMC created a big problem for them. Its shares have exploded since ChatGPT showed up in late 2022, and this month alone, TSMC hit new highs again. In addition, many portfolios already maxed out on TSMC, which now takes up almost 12% of indexes like MSCI Emerging Markets and Asia Pacific Ex-Japan.

Active managers with 10% single-stock caps are being forced to look elsewhere. According to analysts, the next best answer is MediaTek, and it is not just about the Google partnership, even though it is a big reason. Analysts at Morgan Stanley said in a Friday note, “We see large potential” in MediaTek’s AI application-specific integrated circuits. They also pointed out that while Google is also tied up with Broadcom, MediaTek could still get more upside as it shifts resources from phones to AI chips.

Meanwhile, Morningstar analyst Phelix Lee called MediaTek’s forecast “conservative,” saying the company only included Google’s orders through October. The market’s betting it’ll beat that. And considering this recent 19% rally, traders clearly think that’s likely. In terms of the TSMC traffic jam, bulls and bears both can’t get much done because the stock is too crowded.

Some investors are trying to game it through ETFs that are heavy on TSMC, or using structured products and swaps with built-in hedges. But even that’s tricky. AI is still running hot, borrowing costs are low, and short sellers don’t want to get burned. TSMC isn’t just sitting still, either. It’s still the main chip supplier for Google, Apple, and Nvidia, and with its earnings due Thursday, people are watching for another jump. Analysts think it’ll raise its yearly capital spending, which would pour more fuel on the fire.

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The company also mentioned the case was sent to the intellectual property and commercial court and is tied to Lo’s contract, his non‑compete deal, and Taiwan’s trade secrets law. Lo retired in July, and TSMC said he moved to Intel right after leaving. TSMC also said Lo told its lawyer during his exit talk that he planned to join an “academic institution,” which turned out to be false.

TSMC sues former exec as Taiwan waits on its impact

According to the lawsuit, Lo was moved to TSMC’s corporate strategy unit in March last year, but he still met with research and development teams, and those meetings were allegedly used “to provide information for him to understand the advanced technologies currently, and planned to be, under development by TSMC.” TSMC added that it believes Lo “uses, leaks, discloses, delivers, or transfers TSMC’s trade secrets and confidential information to Intel.”

Meanwhile, Taiwan’s economic affairs ministry said it will “closely monitor any impact on the industry” and will work with prosecutors and investigators to see whether the situation touches “violations of the National Security Act.” The ministry also said it wants to understand whether this case goes beyond a contract issue and enters national‑security territory.

The lawsuit comes while TSMC sits in the center of the global AI boom. Companies like Nvidia and Apple, two of TSMC’s largest clients, are pushing huge amounts of money into chips, servers, and data‑center builds. Nvidia has already said it will put US$5 billion into Intel.

The company has struggled to rebuild its chip leadership, as part of US President Donald Trump’s push to increase domestic semiconductor output. Intel CEO Lip‑Bu Tan told Bloomberg last week that his “company respects intellectual property rights” and denied that Intel did anything wrong. Markets reacted fast. Intel’s stock slipped 1.5% in mid‑morning trade. TSMC’s stock moved in the other direction and traded 3% higher on the day.

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According to reports, the figure represents a 30.3% increase from a year earlier and a 13.6% jump from the previous quarter, its second consecutive quarter of profit gains. TSMC CEO CC Wei noted that the market momentum remained solid, with consumer adoption of AI models continuing to drive the need for greater computing capacity and, by extension, more semiconductors. Big tech companies like Nvidia and Apple have long relied on TSMC’s high-end processors for their AI products.

TSMC raises 2025 forecast and details performance of advanced chips

Wei told investors that TSMC had raised its 2025 revenue forecast to the mid-30% range, compared to its earlier estimate of 30% made in July. The company’s high-performance computing division, which covers AI and 5G applications, brought in 57% of total sales for the July–September quarter. The company said that chips sized 7-nanometer or smaller accounted for 74% of total wafer revenue.

These are the most advanced nodes TSMC produces, and they form the backbone of today’s AI infrastructure. Analyst William Li from Counterpoint Research said: “TSMC’s robust earnings are a direct reflection of the strong traction at 3nm as well as high utilization at 4/5nm – both of which are being driven by ongoing orders from AI GPU and HPC customers and premium smartphone platforms.”

US trade pressure and export restrictions loom

According to CNBC, TSMC’s factories are the primary source of the chips that run the largest machine learning systems and next-gen smartphones. And despite current supply chain challenges, TSMC has maintained steady utilization rates across its advanced nodes. TSMC also addressed the U.S. tariff situation in the earnings report, confirming that it is watching policy discussions closely as Taiwan negotiates for a lower reciprocal rate.

Wei said, “We understand there are uncertainties and risks from the potential impact of tariff policies, especially in consumer-related and price-sensitive market segments.” Meanwhile, TSMC has said it would continue to plan accordingly. To reduce exposure to tariffs, the company has increased its investments in US-based facilities, a move aimed at localizing more of its operations. But new challenges are emerging.

The US government has revoked the company’s Validated End User (VEU) waiver, which had previously allowed it to export chipmaking equipment to its Nanjing plant in China without a special license. That privilege will officially end on December 31. The VEU waiver had been granted shortly after the U.S. Commerce Department began restricting exports of US-origin chipmaking tools in 2022. Now, all such shipments to TSMC’s Chinese facilities will need export licenses.

“While we are evaluating the situation and taking appropriate measures, including communicating with the U.S. government, we remain fully committed to ensuring the uninterrupted operation of TSMC Nanjing,” the company said. Other chipmakers have been affected too. South Korea’s SK Hynix and Samsung both lost their VEU privileges in the same round of actions. The Bureau of Industry and Security said it was closing what it called the “Biden-era loophole” for all foreign semiconductor producers, tightening control over advanced chip exports to China.

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Wall Street analysts had predicted a 25% growth across the entire September quarter, but TSMC surpassed that before the end of the quarter. The company is presently in the middle of an AI chip frenzy, because it makes the Nvidia accelerators powering nearly every major generative AI model in use today.

From ChatGPT to enterprise-level AI infrastructure, these chips have become the go-to tool for training complex machine-learning systems. Nvidia depends on TSMC to build them. The Taiwanese firm also manufactures high-end chips for Apple’s iPhones, making it one of the few companies producing at scale for both consumer and enterprise tech.

TSMC records 34% revenue amid Broadcom’s $10B XPU order

Investors are now looking beyond GPUs. On September 10, Broadcom confirmed a $10 billion custom chip deal involving AI accelerators known as XPUs. These chips are being developed in a collaboration with OpenAI and are designed to handle AI processing without depending on Nvidia’s architecture.

Unlike GPUs used for general purposes, XPUs are built specifically for the needs of major cloud providers. Broadcom’s stock rose following the news, echoing last Tuesday’s move in Oracle shares, which hit a record after the company gave an aggressive forecast for its cloud business.

Atif Malik, a senior analyst at Citi, recently revised his price target for Nvidia, cutting his price target for Nvidia from $210 to $200. He mentioned that Nvidia faces “real competitive risks from Broadcom and other hyperscalers putting money into custom silicon.” Atif also kept his Buy rating, but the cut was enough to trigger warnings.

Still, Nvidia shares went up in premarket trading the same day, showing investors are betting on near-term strength, even as the long-term outlook grows cloudy. Citi now sees XPU sales growing 53% by 2026, while traditional AI GPU sales are only expected to rise 34% in the same timeframe. Right now, Nvidia holds about 90% of the AI processor market, but if this custom-chip trend continues, that number is on the line.

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In his address on Thursday, Donald Trump noted that Tim Cook’s company will be largely shielded from import duties, due to their promises to boost their United States operations. “Tim Cook would be in pretty good shape,” he said.

Donald Trump promises exemption for some companies

During a dinner at the White House with a select group of top technology company leaders, including Cook, the president addressed reporters. He commented, referring to chips and semiconductors, “We’ll be putting a tariff very shortly. You probably are hearing we’ll be putting a fairly substantial tariff, or not that high, but a fairly substantial tariff.”

However, he clarified that businesses entering the United States or expanding their presence would be exempt from the tariffs. Earlier last month, the American President announced they would implement a 100% tariff on semiconductor imports and even then still made promises to exempt Apple, considering its additional $100 billion investment pledge.

Overall, Apple is expected to invest $60 billion into domestic manufacturing in the next four years. In addition, it has also confirmed that it would bring a greater share of its supply chain and high-tech manufacturing to the United States under its American Manufacturing Program (AMP), in a collaboration with firms like Corning, Applied Materials, and Texas Instruments. It also announced that Corning will commit a full factory in Kentucky to Apple glass production and increase headcount at the site by 50%.

While Donald Trump promised to exempt firms making the same investment as Apple in the United States, the president added that a separate levy will still target electronics products that rely on semiconductors. He had also previously floated the idea of setting tariffs at more than 100%, with potential levels as high as 200%–300%.

TSMC exempted from the United States chip tariffs

Taiwan Semiconductor Manufacturing Company (TSMC) is also planning to invest about $165 billion into its US manufacturing push in Arizona. Last month, Liu Chin-ching, head of Taiwan’s National Development Council, announced the firm would be exempted from the 100% tariff on U.S. chip imports, even as certain Taiwanese firms remain exposed.

Around the same time, Yeo Han-koo, South Korea’s trade minister, told SBS that chips from Samsung Electronics and SK Hynix are spared from the tariffs thanks to their US commitments. Over a dozen large firms have rolled out major US investment commitments since Trump’s 2024 win, with executives visiting him first at Mar-a-Lago and later at the White House.

However, despite possible relief, there is still a broader concern about Trump’s stance on electronics, considering the size of the US consumer tech market. A sweeping tariff package would cover any semiconductor-containing product, including everything from automobiles to small gadgets.

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Japan made the deal this week with the United States, agreeing to pour funds into US-related projects—through equity, loans, and guarantees—in exchange for lower import tariffs on its goods. The exact layout of the program is still vague. But Akazawa maintains that what matters now is building supply chains that are “critical to economic security.” He added, “If a Taiwanese chipmaker builds a plant in the U.S. and uses Japanese components or tailors its products to meet Japanese needs, that’s fine too”. However, he did not name a specific company.

TSMC could benefit from the agreement between Japan and the US

Taiwan’s TSMC, the world’s top advanced chipmaker, already announced a $100 billion investment plan in the United States earlier this year. The announcement came in March during a White House event with President Donald Trump, and it added to $65 billion already committed toward three chip facilities in Arizona. One of those factories is already running.

The reliance on Taiwan for high-end chips has been seen as a risk in the US, especially due to its proximity to China. Japan is trying to address that risk, not just for the U.S., but for itself too. Under the deal, Japan is expected to route most of the $550 billion through two state-backed financial arms: the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). A newly revised law lets JBIC finance foreign firms if they play a role in protecting Japan’s supply chains.

According to Akazawa, only a small part—just 1 to 2%—of the total investment would be in equity. The rest will be loans and insurance guarantees. That means Japan is not trying to take ownership in these projects; it’s trying to support them without carrying the long-term risks of being a shareholder. When asked about a White House claim that the U.S. would keep 90% of the profits from the investment deal, Akazawa clarified what that number means.

According to him, the U.S. was referring only to returns from equity shares, which would be a very small part of the overall fund. “That figure refers only to returns on equity investment,” he said. Japan initially wanted to receive half of the profits, but Akazawa said the compromise wasn’t a huge loss. The country is saving about 10 trillion yen, or around $67.72 billion, in tariff expenses due to the agreement. That trade-off made the decision easier.

He also added that the government intends to roll out the entire $550 billion within the remainder of Trump’s tenure. It sets a deadline for planning and disbursing the funds. Meanwhile, no official timeline has been released for when the first batch of funds will be released. In addition, no firms—Taiwanese or otherwise—have confirmed whether they’re applying. But Akazawa’s comments made it clear that Japan is ready to back whoever helps build secure chip supply chains, whether that’s in Tokyo, Taipei, or Texas.

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At its shareholders meeting in Hsinchu, Chief Executive C.C. Wei said they have not noticed any shifts in customer behavior; the picture might clear up in the coming months.

“Tariffs do have some impact on TSMC, but not directly. That’s because tariffs are imposed on importers, not exporters. TSMC is an exporter. However, tariffs can lead to slightly higher prices, and when prices go up, demand may go down,” he said. “If demand drops, TSMC’s business could be affected. But I can assure you that AI demand has always been very strong and it’s consistently outpacing supply.”

TSMC sees increased AI demand amid struggles to meet demand

In April, TSMC gave a positive forecast for the year based on AI demand. Wei said TSMC’s job is to give its customers “enough chips, and we’re working hard on that. ‘Working hard’ means it’s not enough.”

When asked about reports that TSMC is eyeing chip factories in the United Arab Emirates, Wei said the company has no plans. He was also asked about the suspension of shipments to Sophgo, a China-based chip designer after its chip matched one in a Huawei AI processor, a company under U.S. limits.

He also added that TSMC works closely with the Taiwan and U.S. governments to comply with laws and rules. TSMC also faces political risk as China steps up military pressure on Taiwan, which Beijing sees as “sacred” Chinese territory.

“If something happens that we don’t want to happen, it’s a matter for governments, not for TSMC alone,” Wei said, replying to a question about a possible crisis in the Taiwan Strait.

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However, the icing on the cake was its annual headline, which blazed past 2.9 billion New Taiwan dollars. According to records, this represents the company’s highest-ever grossing year since it went public in 1994. The revenue figures, fuelled by the demand for AI chips, show that AI demand isn’t just hype. With a client base like Apple and Nvidia, there is a domination war ongoing in the AI market.

TSMC propelled by AI demand

The market has been awash with demand for AI-focused chips, especially GPUs produced by Nvidia. TSMC is the producer of the chips, creating the most advanced semiconductors globally. The chips are built to carry heavy AI workloads, from data centers to high-grade consumer tech. TSMC is the brain behind the creations, providing the tech to companies heading into the AI industry.

TSMC’s smartphone semiconductor market, while not as big as its AI counterpart, continues to improve and adds its share of revenue to the company. Investors have been noticing, with its Taiwan-listed shares surging by 88% in the past year.

Microsoft, on the other hand, is pumping $80 billion into new data centers this year. The company wants to provide an avenue to handle AI workloads. Another Taiwan-based firm Foxconn, also saw a huge turnover in 2024 revenue, boosted by AI.

Global AI market continues to grow

The AI market has continued to grow, ending 2024 with a return of $184 billion. The figure was a big jump from its $135 billion in 2023. The growth is more than $50 billion in the space of 12 months, signaling an increase in demand. The market has been projected to hit $826 billion by 2030, with analysts predicting an annual growth of 36.6%. AI companies were also responsible for 31% of the funding from global venture capitalists.

Generative AI has also become the hotcake of the industry, with about 51% of global companies using it for a wide range of activities. The market has been predicted to hit $1.3 trillion by the end of 2032. However, its impact on jobs cannot be overlooked, with AI predicted to create 133 million jobs globally by 2030. While there are still reservations about it replacing humans, studies have shown that AI is about transformation.

However, there is still the headache of data management for companies using AI. Complications related to data storage in places like the United States and the Eurozone present strong storage challenges. Another issue is trust, with most people having privacy issues. Aside from that, there are still security issues, biases in algorithms, and other risks associated with adopting the technology. Businesses are looking for ways to address these fears, but it is still a tough battle.

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This partnership ensures a consistent supply of high-performance chips for ByteDance’s AI endeavors amidst ongoing U.S.-China tensions.

Strategic development of AI hardware

The new collaboration focuses on developing a 5-nanometer application-specific integrated circuit (ASIC) that conforms to U.S. export regulations. This move is significant as it marks one of the first major initiatives to develop a cutting-edge 5nm chip since the U.S. imposed stringent export controls on advanced semiconductors to China in 2022. 

Reuters cites insiders who reveal that Taiwanese giant TSMC is set to manufacture the chips, although production is expected to commence later this year. ByteDance, primarily recognized for its popular apps TikTok and Douyin, is venturing further into generative AI. 

The Beijing-based company is reportedly shifting from reliance on Nvidia’s A100 graphics processing units, used for running large language models (LLMs), to developing its proprietary chip technology. This strategic pivot is seen as a way to mitigate the impact of U.S. sanctions, which have restricted the export of high-end chips to China, and to lessen its dependency on Nvidia’s GPUs, which are currently scarce due to high global demand and U.S. export limitations.

Expanding capabilities in AI technology

The partnership between ByteDance and Broadcom is not new; it dates back to 2022 when ByteDance acquired Broadcom’s Tomahawk 5nm high-performance switch chip and its Bailly switch for AI computer clusters. With the planned AI chip, ByteDance aims to enhance the power of its algorithms significantly, thereby advancing its AI product capabilities.

This development is particularly crucial as ByteDance seeks to secure more efficient and cost-effective solutions for its hardware needs. This will enable the firm to maintain a stable chip supply for its growing range of AI projects. Such advancements are vital in an era when AI applications are becoming increasingly prevalent and require substantial computational power.

Global demand for AI chips skyrockets

The demand for AI processors has surged as companies like OpenAI and Microsoft intensify their use of LLMs for applications such as ChatGPT, which require extensive computational resources to train and operate. This rising demand has led to a notable shortage of AI chips, pushing the prices upward, with Nvidia’s A100 GPU reportedly priced at around $15,000 each.

A 2020 TrendForce report highlighted the intense resource needs of OpenAI’s GPT models, which required approximately 20,000 of Nvidia’s GPUs for processing training data. As AI technologies like ChatGPT continue to evolve, the demand for such hardware is only expected to increase, making collaborations like that of ByteDance and Broadcom more significant in the tech industry.

This strategic move by ByteDance not only aims at self-reliance in terms of chip supply but also marks a significant step in the global AI technology race, highlighting the intersection of technology development and international trade policies.

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