Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the world's largest manufacturer of advanced chips used in artificial intelligence technologies, announced on Thursday that it achieved record profits for the sixth consecutive quarter, driven by increased spending on technology infrastructure.
Analysts point to continued strong demand for the company's capabilities in manufacturing artificial intelligence chips, along with its advanced chip packaging technology, known as "CoWoS."
This momentum pushed the company, which is considered the highest market value in Asia and the main supplier of NVIDIA and Apple, to new record levels, as its market value reached about two trillion dollars, that is, nearly double the market value of its South Korean competitor, Samsung Electronics.
TSMC said that its net profits during the quarter extending from July to September amounted to 763.1 billion Taiwan dollars (23.59 billion US dollars), an increase of 69 percent compared to the same period last year, exceeding the average expectations of analysts of 746.3 billion Taiwan dollars, according to estimates by “LSEG Smart Estimate”, which is based on the opinions of 16 analysts.
TSMC shares, listed on the Taipei Stock Exchange, closed 2 percent lower on Thursday, ahead of the results announcement, while the main market index fell 3.4 percent.
These results represent the highest quarterly profits the company has ever achieved, and constitute the eleventh consecutive quarter in which it has recorded growth in its profits. Last week, the company announced that its revenues in the third quarter increased by 50 percent year-on-year, exceeding market expectations and recording a new record level.
TSMC is investing $265 billion in building chip production factories in the US state of Arizona, including an additional investment of $100 billion revealed in July.
In September, Reuters reported that the company was studying a potential investment in Texas. Elon Musk, CEO of Tesla, also said last week that his companies will build and operate the TerraFab complex to produce and operate artificial intelligence chips, with the possibility that TSMC will rent part of its facilities.
During the results announcement conference in July, the company raised its estimates of capital expenditures for the current year to a range between 60 billion and 64 billion dollars, compared to previous expectations that ranged between 52 billion and 56 billion dollars at the highest end.
For its part, ASML, the world's largest manufacturer of equipment used in the production of advanced semiconductors and artificial intelligence chips, said on Wednesday that its customers have already begun placing orders for the years 2029 and 2030, indicating continued long-term demand, which eased concerns about the possibility of declining investment momentum in artificial intelligence.
TSMC shares, listed on the Taipei Stock Exchange, have risen by 57 percent since the beginning of the year, in line with the gains of the Taiwanese market as a whole, which amounted to 62 percent.
The dollar retreated from its highest level in 18 months on Thursday, under pressure from the sharp decline in US Treasury bond yields as investors moved towards safe assets, while cautious statements by Federal Reserve officials contributed to calming expectations about raising interest rates during October, despite the release of higher-than-expected inflation data.
The dollar index, which measures the performance of the US currency against a basket of major currencies, fell by 0.2 percent to 101.99 points, giving up most of the gains it achieved following the release of inflation data on Wednesday, which was stronger than expected and pushed the index to its highest levels in 18 months.
The dollar's decline helped the euro recover by 0.6 percent from its lowest level in 18 months, reaching $1.1223, heading towards recording its largest daily gain in about two months. The British pound also rose 0.4 percent to $1.3250, recovering from its lowest level in 13 months.
An atmosphere of risk aversion prevailed in the markets, after the Consumer Price Index data reinforced expectations that US interest rates would remain high for a longer period, and at the same time re-raised concerns about the heavy debt burdens on artificial intelligence companies, which prompted investors to turn towards US Treasury bonds as a safe haven.
The demand for US government bonds pushed the standard 10-year Treasury bond yield to fall to 5.0933 percent, while the 30-year bond yield fell to 5.4462 percent, with both yields recording their lowest levels in three weeks.
“The dollar fell rapidly... and we believe the main factor behind this is the decline in 30-year bond yields,” said Rodrigo Catril, chief currency strategist at National Australia Bank.
He added: “If yields continue to decline, the dollar may face further pressure.” But current indicators suggest that it may enter a phase of stability, especially since expectations of the Federal Reserve raising interest rates still exist.
Market expectations for raising US interest rates in October rose sharply to 50 percent following the release of consumer price index data. However, statements by a number of Federal Reserve officials, including Vice Chairman for Oversight Michelle Bowman and San Francisco Federal Reserve Bank President Mary Daly, that the central bank may prefer to wait for more clarity before its meeting scheduled for October 27 and 28, contributed to a decline in those expectations.
“Although the CPI data came in slightly higher than expected, markets seem to have concluded that it does not represent a sufficient rise in inflation to force the (Federal Reserve) to take action during October,” said Khun Goh, head of Asia research at ANZ Bank.
He added: “Also, the October meeting precedes the midterm elections by a few days, and this may explain the markets’ reluctance to adopt bolder expectations regarding the central bank’s movements during the month.”
Investors' attention is now turning to US producer price and retail sales data, scheduled to be released later on Thursday, amid expectations that producer price data will reveal rising business costs over the past month.
Investors are also awaiting statements by Federal Reserve officials, including Kevin Warsh, during the annual meetings of the International Monetary Fund and the World Bank in Bangkok, searching for indications about the next steps for US monetary policy.
In currency markets, the Australian dollar fell by 0.3 percent to $0.6952, after local data showed an unexpected decline in employment during September. In contrast, the New Zealand dollar rose 0.6 percent to $0.5626.
The Japanese yen also rose to 157.675 yen to the dollar, and the Swiss franc rose by about 0.8 percent to 0.8282 to the dollar.
In China, the yuan traded in foreign markets recorded a slight increase to 6.6926 against the dollar, after data showed an acceleration in producer price inflation over the past month, driven by rising costs of basic goods.
The International Monetary Fund expected the economies of the Middle East, North Africa and Pakistan to recover to growth of 6.6 percent in 2027, after an expected contraction of 1.3 percent this year, in light of the economic repercussions of the war in the Middle East and the disruptions in energy production and trade, which left varying effects among the countries of the region.
Jihad Azour, Director of the Fund's Middle East and Central Asia Department, said that the economies directly affected by the conflict are facing severe pressure, while other economies in the region, along with most of the Caucasus and Central Asian countries, have shown greater resilience. He explained that the recovery path depends primarily on the speed with which energy production and trade return to normal, and the ability of countries to maintain overall economic stability.
The expectations come after the economies of the Middle East, North Africa and Pakistan region grow by 3.3 percent in 2025, reflecting the size of the expected shock during the current year, before a strong rebound next year. However, Azour stressed that the overall expectations hide a large disparity between the region’s economies, and that the recovery will not be equal between countries.
Disparity between oil exporters and importers
Azour explained that oil-exporting countries that were directly affected by energy and trade disturbances will face a noticeable contraction in 2026, although the rise in oil prices will provide some support for their financial and external conditions. The gradual recovery in production and trade is expected to lead to a strong recovery in GDP growth during 2027, but production levels will remain below the path that was expected before the outbreak of the conflict.
On the other hand, economic activity in oil-importing countries within the region maintained a degree of flexibility during 2026, and this is expected to continue. Remittances from workers abroad, tourism revenues, easy financial conditions, and government support contributed to reducing the immediate impact of the shock, although the margins available for economic policies were shrinking.
The Fund expected a moderate rise in inflation in these economies during 2026, before it gradually declines in the subsequent period.
Less inventory, more risk
Azour pointed out that the impact of the energy shock was less severe than initial estimates suggested, thanks to the surpluses accumulated before the war, the production of non-Gulf countries, alternative transportation methods, demand adjustment, and withdrawal from stocks. But he warned that these factors provided time to adapt, without being sustainable resources, as available stocks declined and spare production capacity narrowed, making markets more vulnerable to greater price increases if the unrest renews.
He considered the continuation of the war for a longer period to be the most prominent risk to expectations, warning that any additional disruptions in energy production, shipping routes, or vital infrastructure would weaken the economic activity of oil exporters in the Gulf, increase inflationary pressures, and exacerbate pressures on the financial and external conditions throughout the region.
He also warned that tightening global financial conditions could weaken demand, raise borrowing costs, and increase pressure on currencies, especially in economies that face large needs to finance sovereign debt or rely on external financing. Low-income and fragile economies remain the most exposed to these risks, given their dependence on food imports and limited fiscal space, in conjunction with the decline in official development aid.
A call for targeted support and rebuilding financial margins
Azour called on policy makers to give priority to price stability and financial sustainability, while using monetary policy as the first line of defense when inflationary pressures emerge, and to integrate it with prudent financial policy, especially in countries with limited financial resources.
He stressed the importance of rebuilding financial margins to confront future shocks, by enhancing local revenues, raising spending efficiency, and developing financial frameworks, warning against resorting to large-scale support, and preferring to provide temporary and directed cash assistance to the most affected groups, in a way that keeps the cost of intervention within the limits of budgets.
In the long term, he stressed the importance of strong institutions, reliable monetary frameworks, and the independence of central banks, in addition to diversifying trade, deepening regional integration, and enhancing the ability to adopt new technologies, including artificial intelligence, to raise productivity and support growth.
Azour pointed out that, since 2020, the International Monetary Fund has approved financing of about $48 billion for countries in the region, and during the fiscal year 2026 it implemented about 437 technical assistance and capacity-building projects in 31 countries. The Fund is scheduled to issue its full regional report on October 22 in Dubai, including a more detailed assessment of economic developments and policy priorities.
