TSMC Stock Dips Despite Record Q3, Musk Talks Spark Texas Chipmaking Debate

Taiwan Semiconductor Manufacturing Company (TSMC) shares surprisingly dipped by 3-4% today, even after the chipmaking giant reported a sixth consecutive quarter of record-breaking profits for Q3 2026, driven by soaring demand for AI chips. This seemingly contradictory market reaction stems from investor concerns over a slight narrowing of gross margin and a stable capital expenditure forecast, rather than an increase, despite booming demand. The slight margin dip, to 66.4% from 67.7% last quarter, is mainly due to the costly ramp-up of TSMC cutting-edge 2-nanometer technology and expansion into overseas fabs. Meanwhile, talks between TSMC and Elon Musk ambitious 'Terafab' project in Texas are underway, but hit a snag over who gets to actually run the chip factory. TSMC CEO, C.C. Wei, insists the company must operate any fab producing its chips, directly contrasting Musk's earlier statements about Tesla and SpaceX retaining operational control. Looking ahead, TSMC expects another strong quarter, forecasting Q4 revenue between $52.3 billion and $54.3 billion, well above analyst estimates, driven by continued robust demand for advanced chips. The ongoing negotiations with Musk, alongside TSMC aggressive global expansion plans—including new 3-nanometer fabs in Taiwan, the U.S., and Japan—will shape the future landscape of AI chip production and could impact the broader semiconductor industry, which analysts predict will continue its rapid growth into 2027 and beyond.