TAIPEI (Taiwan News) — TSMC reported Thursday a Q3 gross margin of 59.5%, the highest since Q1 2023, driven by better cost management and increased capacity use.

TSMC CFO Huang Ren-chao (黃仁昭) said at a corporate briefing that Q3 margin rose 0.9 percentage points from the previous quarter, exceeding the mid-July guidance of 57.5% by 2 points, per CNA. A stronger Taiwan dollar, averaging NT$29.91 (US$0.98) per US dollar, and better-than-expected cost improvements helped drive growth.

For Q4, TSMC forecasts gross margin between 59% and 61%, with the midpoint representing a 0.5-point increase from Q3. Huang noted the Taiwan dollar is expected to remain favorable, though overseas fab costs will slightly dilute margins, with an average Q4 rate assumed at NT$30.6 per US dollar.

Despite higher costs at foreign fabs, TSMC’s operational scale mitigates the impact. The H2 ramp-up of overseas fabs is expected to dilute margins by roughly 2%, with annual gross margin dilution now projected at 1–2%, below earlier estimates of 2–3%.

Huang said TSMC remains focused on balancing domestic and international operations. He added that maintaining margins while scaling production for advanced nodes and expanding global market share.

TSMC reported NT$453.3 billion (US$14.78 billion) in net profit for July-September, riding on advanced chip demand for applications.