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AI Chips & Compute

TSMC Beats Third-Quarter Estimates on AI Demand, but Shares Fall in Chip Selloff

TSMC reported third-quarter revenue of $46.36 billion and a 68.7% rise in net income, topping estimates, while its shares fell 2% as an AI-related selloff hit chipmakers including Samsung and SK hynix.

AI News Feed · 2026-10-16 06:36

The decline was tied to a broader retreat from AI shares that began Wednesday after an X post about the debt load of CoreWeave Inc., an AI cloud provider, according to SiliconANGLE. The selling quickly spread to other neoclouds and the hardware suppliers that serve them.

TSMC was not alone. Samsung Electronics Co. and SK hynix Inc. dropped more than 8%, and Intel Corp. was down 6.6% at one point during the day. Chip stocks recovered part of those losses after Nvidia Corp. Chief Executive Jensen Huang told Bloomberg that CoreWeave's cost of capital is decreasing, a measure that influences a company's ability to manage its debt.

AI demand remained the main driver of TSMC's quarter. The company's high-performance computing segment, which includes graphics cards made for clients such as Nvidia, accounted for 68% of the $46.36 billion in revenue. Analysts had expected $45.4 billion.

The three-nanometer node was TSMC's most popular manufacturing process in the quarter, at 33% of sales. The company began producing three-nanometer chips in 2022 and has since introduced specialized versions, including a variant optimized for the data center market last year and a lower-cost version for mobile chips a few months ago.

TSMC said it has completed construction of its three-nanometer Fab 2 plant in Arizona and is installing chipmaking equipment, with mass production expected to begin in the third quarter of 2027, according to CNBC. The plant is part of a $265 billion investment plan that already includes a four-nanometer factory nearby. TSMC broke ground last year on a third factory that will make two- and 1.6-nanometer chips, and it is building a packaging facility, the technology that links a graphics card's computing and memory modules.

Growth came from outside AI as well. Demand for TSMC's automotive chips rose 22% from a year earlier, and orders from smartphone makers increased 10%. Net income climbed 68.7% to $23.57 billion, about $500 million above analyst projections.

The company's newest two-nanometer process, which entered production in the fourth quarter of 2025, generated 8% of third-quarter revenue, up from 3% three months earlier. TSMC said it is adding two-nanometer manufacturing capacity and developing a 1.6-nanometer process called A16, and told investors it plans to significantly increase capital expenditures over the next two years to support its growth initiatives.