TSMC Posts Record Profit and Sets Terms for Musk’s Terafab

TSMC keeps doing what the AI boom asked of it: printing records. The company said third-quarter net income rose 68.7 percent to 763 billion New Taiwan dollars, about $24 billion, its sixth straight quarter of record profit. Revenue hit $46.7 billion, up 16.2 percent from the prior quarter and above the top end of TSMC’s own forecast.

The business mix tells the story. High-performance computing, which includes AI accelerators, now brings in 68 percent of revenue. Smartphones are down to 21 percent. Chips made on 7 nanometers and below account for 79 percent of wafer revenue, so this is not a company getting rich on old silicon and nostalgia.

Chief executive C.C. Wei sounded almost impatient about demand. He said there was no sign of slowdown and described the gap between what customers want and what TSMC can ship as still “quite big.” TSMC now expects fourth-quarter revenue of $52.3 billion to $54.3 billion, which would be about 58 percent higher than a year earlier, and it still sees full-year growth of about 44 percent. It also plans to spend $60 billion to $64 billion this year, with much more investment over the next three years.

The company is building for that demand everywhere it can. Two-nanometer production is ramping in Hsinchu and Kaohsiung, with capacity set to more than double in 2027. The next process, A14, is scheduled for volume production in 2028. More 3-nanometer fabs are going up in Tainan, and the second fab in Arizona is expected to start volume production in the third quarter of 2027.

Then there is Texas, where the TSMC-Musk story gets messy. Wei said TSMC is evaluating another site there and is in talks with a customer about the Terafab project, Musk’s planned chip factory for Tesla and SpaceX. Wei drew a hard line: the fab has to be run by TSMC, though he said the company could at most sublease part of it. Musk, naturally, posted the opposite on X, saying Tesla and SpaceX would build and run it themselves. For now, that sounds less like a plan than a collision.