Taiwan Semiconductor Manufacturing Company (TSMC) has adopted a cautious approach to its 2027 business outlook despite reporting its sixth consecutive quarter of record profits, driven by strong demand for artificial intelligence chips.
The world’s largest advanced chip manufacturer said demand for AI-related products remained exceptionally strong, with no immediate signs of a slowdown in the broader artificial intelligence boom. However, Chief Executive Officer C.C. Wei warned that rising component prices and macroeconomic uncertainty were creating challenges for consumer-facing and price-sensitive markets.
Speaking during an earnings call on Thursday, Wei said the company was taking a measured approach to its business planning for 2027 while continuing to focus on strengthening its competitive position.
Despite the cautious outlook, TSMC maintained that demand for its advanced semiconductor manufacturing technologies continued to exceed available supply. The company raised its full-year 2026 revenue growth forecast to approximately 44%, up from its previous projection of more than 40%.
TSMC also identified the growing adoption of agentic artificial intelligence systems, which can perform tasks with limited human intervention, and sustained demand for networking chips as important drivers of future semiconductor demand.
The results come amid concerns about whether the substantial investment in artificial intelligence infrastructure can maintain its current pace. However, ASML, a major supplier of semiconductor manufacturing equipment, provided an upbeat outlook, with some customers already considering orders for 2029 and 2030.
TSMC, whose major customers include Nvidia and Apple, expects fourth-quarter 2026 revenue to range between $52.3 billion and $54.3 billion. Revenue at the upper end of the forecast would represent an increase of approximately 61% compared with the $33.73 billion recorded in the corresponding period last year.
The company also maintained its 2026 capital expenditure forecast at between $60 billion and $64 billion, reflecting its continued investment in manufacturing capacity to meet growing demand.
However, investor sentiment across the technology sector weakened ahead of the earnings announcement. TSMC shares listed in Taipei fell 2% as concerns about possible further US Federal Reserve interest rate increases weighed on technology stocks, particularly companies whose valuations are sensitive to higher borrowing costs.
South Korean semiconductor manufacturers Samsung Electronics and SK Hynix also recorded sharp declines, with their shares falling by more than 10%.
Gary Tan, a portfolio manager at Allspring Global Investments, which holds TSMC shares, said the company’s cautious comments reflected a broader pattern of restraint among semiconductor businesses during recent earnings announcements and investor presentations.
Tan warned that TSMC’s conservative outlook could prompt analysts to lower earnings forecasts across the semiconductor industry, which has benefited from repeated upward revisions driven by strong demand.
Nevertheless, he suggested that the company’s position reflected prudent management of market expectations rather than a fundamental deterioration in the industry’s long-term prospects.
Analysts continue to highlight strong demand for TSMC’s AI chip manufacturing capacity and its advanced packaging technology, known as Chip-on-Wafer-on-Substrate (CoWoS). The technology helps integrate sophisticated semiconductor components used in modern artificial intelligence applications.
Strong demand has reinforced TSMC’s position as Asia’s most valuable publicly traded company, with a market capitalisation of approximately $2 trillion, nearly twice that of Samsung Electronics.
For the July to September quarter, TSMC reported net profit of T$763.1 billion, equivalent to approximately $23.59 billion. The figure represented a 69% increase from the same period a year earlier and exceeded the T$746.3 billion estimate compiled by LSEG from 16 analysts.
The result marked the company’s highest quarterly net profit on record and extended its year-on-year profit growth streak to 11 consecutive quarters.
TSMC had previously reported that third-quarter revenue increased by 50% year on year to a record T$1.49 trillion, equivalent to approximately $46.71 billion, beating market expectations.
Beyond its operations in Taiwan, TSMC is expanding its manufacturing footprint in the United States to accommodate rising demand and strengthen its position in the global semiconductor industry.
The company is investing $265 billion in chip manufacturing facilities in Arizona, including an additional $100 billion announced in July. TSMC said construction of its second Arizona fabrication plant had been completed, with mass production scheduled to begin in the third quarter of 2027, ahead of the original timetable.
The company is also assessing opportunities to expand beyond Arizona. Reuters reported in September that TSMC was evaluating a potential investment in Texas as major US customers sought additional local manufacturing capacity.
Wei confirmed that the company had sent teams to Texas to assess possible expansion opportunities. He added that the US government had supported its efforts to increase domestic semiconductor manufacturing.
The chief executive also addressed discussions surrounding Terafab, an artificial intelligence chip manufacturing project associated with Tesla CEO Elon Musk. Musk had said his companies would build and operate the proposed complex, with TSMC potentially subleasing part of the facility.
Wei confirmed that discussions had taken place but stressed that any fabrication facility involving TSMC in a manufacturing partnership would need to be operated by the company itself.
Meanwhile, ASML’s comments about potential customer orders extending into 2029 and 2030 provided further indications that demand for advanced semiconductor manufacturing equipment could remain strong beyond the near term.
TSMC shares listed in Taipei have gained 57% so far this year, compared with a 62% increase in the broader Taiwanese stock market.
Goodness Anunobi
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