Taiwan Semiconductor Manufacturing Co. had its highest-revenue quarter on record, and its own revenue report of 8 October lets anyone check the size of the beat. Revenue for January to September was NT$3,898.73 billion. Subtract the NT$1,134.10 billion and NT$1,270.38 billion TSMC reported for the first two quarters, and the third quarter comes to about NT$1,494 billion, or roughly US$46.7 billion.
That is above the top of the range TSMC set for itself in July. The company reports profit on Thursday 15 October. The revenue is known. The margin is not, and the forecasts for it are lower than last quarter's.
What TSMC has already said
In its second-quarter release on 16 July, TSMC guided to third-quarter revenue of US$44.6 billion to US$45.8 billion, a gross margin of 65 to 67 per cent and an operating margin of 56 to 58 per cent, assuming an exchange rate of NT$32 to the dollar.
At that rate, NT$1,494 billion is about US$46.7 billion, roughly US$0.9 billion, or 2 per cent, above the top of the range. That is this publication's arithmetic. TSMC's own dollar figure arrives on Thursday.
Year on year, the quarter compares with NT$989.92 billion in the third quarter of 2025, growth of about 51 per cent. Sequentially, it is about 18 per cent above the second quarter. September alone was NT$511.86 billion, up 54.6 per cent on a year earlier, TSMC said.
The margin the market is pricing
Reuters reported on Monday that the LSEG SmartEstimate, drawn from 16 analysts, puts third-quarter net profit at NT$746.3 billion, up about 65 per cent, according to Yahoo Finance. Divide that by about NT$1,494 billion of revenue and the implied net margin is about 49.9 per cent.
The second quarter's net margin was 55.6 per cent, on net income of NT$706.56 billion. A year ago it was 45.7 per cent: NT$452.30 billion of profit on NT$989.92 billion of sales. Profit would be a record by either measure. The margin would be a step down from the second quarter.
Where the drop comes from
TSMC's second-quarter management report shows non-operating gains of NT$95.83 billion, against NT$28.83 billion in the first quarter and NT$29.61 billion a year earlier. It attributes the increase mainly to NT$63.20 billion of disposal and mark-to-market gains on shares of Vanguard International Semiconductor.
Take that gain out of second-quarter net income and about NT$643 billion remains, or 50.6 per cent of revenue. That treats the gain as untaxed, which overstates its effect, and we have not seen a tax figure for it. It is a rough bound, not a restatement. Even so, it puts the second quarter's underlying margin close to the 50 per cent analysts now expect.
The first quarter points the same way. TSMC reported a first-quarter net margin of 50.5 per cent on an operating margin of 58.1 per cent. The second quarter's 60.3 per cent operating margin carried a 55.6 per cent net margin. The guidance range for the third quarter, 56 to 58 per cent, brackets the first quarter, not the second.
By this publication's arithmetic, an operating margin of 56 to 58 per cent on NT$1,494 billion is NT$837 billion to NT$867 billion of operating income. Consensus net income of NT$746.3 billion is 86 to 89 per cent of that. In the first quarter, net income was 86.9 per cent of operating income. In the second, with the gain, it was 92.2 per cent. The forecast assumes a first-quarter pattern.
What happens next
There is a way for the forecast to be wrong. The second quarter's 60.3 per cent operating margin was above the whole range now guided for the third. If the third-quarter operating margin came in at 60 per cent and converted to net income at the first quarter's ratio, net income would be about NT$779 billion, a net margin of about 52 per cent and roughly 4 per cent above consensus. That is an illustration of sensitivity, not a forecast.
The test on Thursday is therefore narrow. Look first at the gross margin against the 65 to 67 per cent guide, then at non-operating items, which should fall back toward the NT$29 billion of earlier quarters if the Vanguard gain was a one-off. The last item is fourth-quarter guidance, which TSMC has not yet issued. ASML, which makes the lithography machines TSMC's fabs depend on, reports on Wednesday and will give an earlier read on how much chipmakers are still spending.
September and nine-month revenue come from TSMC's revenue report of 8 October 2026. Second-quarter results, margins and third-quarter guidance come from TSMC's 16 July 2026 release; the NT$63.20 billion Vanguard International Semiconductor gain, non-operating items and operating income come from its second-quarter management report. First-quarter revenue, operating income and margins come from its 16 April 2026 management report, and year-ago figures from its 16 October 2025 release. The NT$746.3 billion consensus (LSEG SmartEstimate, 16 analysts) was reported by Reuters on 12 October, as relayed by Yahoo Finance; we did not see the Reuters original. The 15 October results date is from the same Yahoo Finance report. The implied third-quarter revenue, its dollar conversion, the growth rates, margins, conversion ratios and the ex-gain margin are this publication's arithmetic. The analysis is our own.
Topics marketsTSMCsemiconductorsearnings
