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Taiwan Semiconductor Manufacturing Company reported its highest quarterly profit, fuelled by the artificial intelligence boom.

The Taiwanese chipmaker on Thursday reported NT$452.3bn ($14.8bn) in net earnings for the third quarter, a 39.1 per cent jump year on year, along with a 6 per cent rise in revenues on the previous quarter to NT$989.9bn.

Shares in the world’s largest chipmaker have gained more than 40 per cent in the past 12 months as a result of soaring demand for high-performance semiconductors, as companies race to build infrastructure for artificial intelligence data centres.

“AI demand continues to be very strong, stronger than we thought three months ago”, said chair and chief executive CC Wei to investors.

TSMC, which supplies companies including Nvidia, AMD, Broadcom and Apple, makes more than 90 per cent of the world’s most advanced chips and has in recent years widened its lead over rivals Samsung and Intel.

The company said the cost of its overseas expansion continued to dilute its gross margin, which was 59.5 per cent.

Still, the company’s gross margin exceeded its high-end guidance for the second quarter owing to a more favourable exchange rate. The chipmaker’s revenues are mainly in dollars and were dented by the appreciation of the Taiwanese dollar earlier this year.

The Taiwanese chipmaker has a large US investment plan in place and is beginning mass production of advanced chips in Arizona this year.

Donald Trump’s administration is determined to reduce America’s dependence on vulnerable overseas tech supply chains. It recently took a 10 per cent stake in struggling chipmaker Intel.