Taiwan Semiconductor (TSM) is the world's largest contract chip maker. On Thursday, Oct. 15 it reported another record profit. Profit jumped 69%. It raised its forecast for the year a third time. Its U.S. shares fell 1.8% anyway. A day earlier ASML (ASML), the Dutch company that builds the machines TSMC uses, had a similar day. Strong results, a third raise, and U.S. shares down nearly 4%.
Start with TSMC's numbers. Third-quarter net profit rose 69% to NT$763.06 billion, about US$23.71 billion. Revenue was NT$1.494 trillion, up 51% from a year earlier. For the fourth quarter it expects US$52.3 billion to US$54.3 billion in revenue. For the full year it now expects growth of around 44%, up from “slightly over 40%” in July. The Journal's Sherry Qin reports the company is keeping its spending plan at US$60 billion to US$64 billion this year. Some analysts think that passes US$80 billion in 2027.
Chief Executive C.C. Wei also talked about Texas. TSMC has sent teams there to look at sites beyond its Arizona plants. In July it pledged another US$100 billion for Arizona, for a total of US$265 billion. Wei confirmed talks about Elon Musk's proposed Terafab project, with no decision yet. He set one condition. Any plant making TSMC chips has to be run by TSMC. On worries that its spending feeds an AI bubble, Wei said TSMC has its own system for checking how much data-center capacity is really needed. “We have a very good idea of our customers’ multiyear product road map,” he said.
ASML's customers are asking about 2030
ASML sells the lithography machines that print the chips. On Wednesday, Oct. 14 it raised its 2026 sales forecast to €44 billion to €45 billion, the third raise this year. Third-quarter sales were €11.66 billion, up from €7.52 billion a year earlier. Net profit was €4.96 billion. CEO Christophe Fouquet said some customers want to place orders for 2029 and even 2030. The company had planned to lift output 30% in 2027 and another 30% in 2028. Fouquet now says that won't be enough. Higher prices start to show in 2027, the finance chief said. The Amsterdam shares rose 1.2%. The U.S.-listed shares slipped nearly 4% in Wednesday's selloff. The stock is still up about 80% over 12 months.
Our read
This is Investments/Risk · IN04. Both companies are held at weight in our books, TSMC in 30 and ASML in 18. Nothing added. This week showed why we own them the way we do. They sell the picks and shovels. They get paid by most of the industry, whoever wins the AI race. And still, on a day when the crowd sold anything with 'chip' in the name, their shares fell with the rest. Good earnings and a good stock price can part ways for a while. That's the risk of a crowded trade, and it's why neither name is more than a slice of any book.
In your own plan this touches one line, the international or 'developed markets' fund in your 401(k) or 403(b). TSMC and ASML often sit at or near the top of those funds' holdings, and after two strong years they can be a big share of it. This week, open the fund's fact sheet and read the top ten holdings and their weights. Add up the chip names. If they're more than a tenth of a fund sold as broad, your 'diversified' international sleeve leans on chips. You don't check the life jackets once the boat is rocking. We'd be glad to size that sleeve with you at a review.