TSMC earned US$259m a day as quarterly margins slipped
Profit rose 68.7% from a year earlier. The quarter-to-quarter comparison reveals new production costs, missing earlier gains and a useful distinction between earnings and cash.
TSMC earned NT$763.06 billion in the third quarter, up 68.7% from a year earlier, the chipmaker reported on October 15. Its unaudited accounts put profit attributable to shareholders at US$23.858 billion. Across the quarter's 92 days, that averages about US$259 million a day, by our calculation. It is an earnings average, not a daily cash receipt.
The surprise is in the comparison with the previous quarter. Sales rose 17.6% in New Taiwan dollars, but profit rose only 8%. TSMC earned more in total while keeping a smaller share of each dollar of sales.
Growth and margins can move apart
Net profit margin fell from 55.6% to 51.1%, a drop of 4.5 percentage points. Gross margin declined from 67.7% to 66.4%, and operating margin from 60.3% to 58.7%.
TSMC's management report attributes the gross-margin decline mainly to the initial ramp-up of its N2 technology. The comparison also includes income outside ordinary operations: non-operating gains fell from NT$95.83 billion to NT$34.59 billion, mainly because earlier gains on Vanguard International Semiconductor shares did not recur.
The annual growth rate and the quarterly margin decline describe different things. Together they show why a profit headline needs both a time period and a denominator.
Cash covers this quarter's capital spending
Operating cash flow was NT$919.77 billion against NT$443.21 billion of capital expenditure. Spending therefore absorbed about 48.2% of operating cash flow, leaving NT$476.56 billion of free cash flow under the company's calculation.
That is substantial funding capacity. It does not trace every factory payment to operating receipts. The same report records interest-bearing debt and investment tax-credit inflows; a cash-rich builder can still have several sources of financing.
The next test is another step up in sales
TSMC's fourth-quarter guidance calls for US$52.3 billion to US$54.3 billion of revenue. The US$53.3 billion midpoint is about 14.1% above the third quarter's US$46.72 billion, by our calculation. Its projected gross margin is 65% to 67%, a range that includes the latest quarter's 66.4%.
The forecast asks readers to expect more sales without assuming a higher margin. It remains management's outlook, not a completed result. These are company-wide figures, not a separate measure of AI-only profit.
The expansion also depends on equipment and construction schedules. Read our analysis of ASML's supply warning and the long timetable behind SK hynix's manufacturing plan.
Drafted with AI assistance from the credited sources and source-checked by AI before publication. No human factual review is claimed. Material sources are credited and linked above; quotations are brief and attributed.