Opening

TSMC's Q3 net profit grew 68.7% year-over-year, setting another record quarter, as the company evaluates expanding its U.S. fab footprint from Arizona into Texas and discusses a partnership with Elon Musk's chip park. A remark from China's ambassador to the Philippines, "Using force would make it easy to win, but we love peace," led Manila to call it a veiled threat of force; meanwhile, the Fed chair's vague remarks also put markets on edge, and I'll explain why in a moment. I'm Mu Yan, and this is today's AI International News Brief.

Today's International Spotlight

1. TSMC's Q3 Net Profit Soars 69%, Evaluating Expansion to Texas, Discussing Partnership with Musk's Chip Park

• What happened: TSMC's Q3 revenue reached $46.72billion,up41.246.72\; billion,\; up\; 41.2\%\; year-over-year,\; with\; both\; net\; profit\; and\; EPS\; growing\; 68.7\%\; and\; each\; ADR\; unit\; reaching$4.60, marking another consecutive record quarter. According to Nikkei Asia, TSMC is building new fabs at an unprecedented pace amid extremely strong demand, and is evaluating expanding its U.S. footprint from Arizona to Texas while discussing how it might participate in Musk's Terafab chip park.
• Why it matters: TSMC is the core global supplier of leading-edge semiconductor processes, so where its U.S. expansion ultimately lands will shape the geographic distribution of AI chip capacity for years to come.
• Taiwan's perspective: TSMC's moves directly affect Taiwan's stock valuations and the New Taiwan dollar's exchange rate; whether orders stay with the southern Taiwan supply chain remains a key thing to watch.
• Source: Nikkei Asia (https://asia.nikkei.com/business/tech/semiconductors/tsmc-profit-soars-69-in-another-record-quarter-fueled-by-ai-boom)

2. China's Ambassador to the Philippines Sparks Diplomatic Row Over Remarks on Force

• What happened: China's ambassador to the Philippines publicly stated that if China wanted to use force, it could easily win, but that China chooses peace and will not resort to force. The Philippine Department of Foreign Affairs responded that the remarks conveyed a veiled threat of force and expressed regret; China's embassy in Manila countered that the Philippines was selectively quoting and over-interpreting the comments.
• Why it matters: This dispute illustrates how countries around the South China Sea respond diplomatically to China's gray-zone pressure, though the parties still disagree on how to characterize the incident.
• Taiwan's perspective: The same rhetorical pattern, "we don't want to use force, but we'd win if we did," is often used by Beijing when discussing Taiwan; the Philippines' diplomatic response in this case offers a useful reference point for observing gray-zone pressure tactics in the First Island Chain.
• Source: Hong Kong Free Press (https://hongkongfp.com/2026/10/16/china-loves-peace-but-could-easily-win-confrontation-with-philippines-ambassador/)

3. Fed's Warsh Keeps Comments Vague as Inflation Data Unexpectedly Heats Up

• What happened: Fed Chair Kevin Warsh, in his last public remarks before October's policy meeting, said, according to CNBC, that he would not "prejudge meetings." However, September's Producer Price Index rose 1.3% month-over-month and 6.3% year-over-year, the largest increase since March 2022 and far above the market's expected 0.6%; the 10-year Treasury yield climbed to around 5.085%.
• Why it matters: Markets currently price in only about a 15% chance of an October rate hike, but the hotter-than-expected inflation data could make the Fed's decision harder to predict than previously thought.
• Taiwan's perspective: U.S. Treasury yields and rate-hike odds affect the New Taiwan dollar's exchange rate and foreign investors' costs of moving in and out of Taiwan's stock market, as well as exporters' hedging costs and tech stock valuations.
• Source: CNBC (https://www.cnbc.com/2026/10/16/kevin-warsh-fed-october-rate-hike-interest-rates-markets.html)

4. Japan PM Takaichi's Cabinet Approval Rating Hits Record Low

• What happened: A Jiji Press poll shows Prime Minister Sanae Takaichi's cabinet approval rating has fallen to 42.4%, down 1.7 percentage points from last month, the lowest since she took office a year ago. The poll reflects public dissatisfaction that she kept Agriculture, Forestry and Fisheries Minister Kazuo Yana in his post for over two weeks after controversy erupted around him; Yana ultimately resigned on Wednesday.
• Why it matters: Cabinet approval ratings gauge an administration's ability to push policy forward, which matters for how much room the Takaichi government will have to maneuver on domestic and diplomatic issues going forward.
• Taiwan's perspective: The strength of public support for the Takaichi administration will influence how strongly Japan speaks out on Taiwan Strait issues, and also affects the pace of progress on Taiwan-Japan trade and tourism policy.
• Source: Nippon.com (Jiji Press) (https://www.nippon.com/en/news/yjj2026101500705/)

5. Istanbul Hit by Worst Flooding in 80 Years, 4 Dead

• What happened: Istanbul, home to 16 million people, saw 48-hour rainfall exceed the combined historical average for September and October, leaving 4 dead and 4 missing. According to ABC News, Turkey's Interior Minister Mustafa Ciftci called it the worst flooding since 1942. The city logged 9,850 damage reports, and 46,000 personnel were mobilized for cleanup and relief efforts; the environment minister linked the disaster to climate change.
• Why it matters: The scale of the extreme rainfall broke local historical records, and while the environment minister has attributed the event to climate change, the precise cause still requires further analysis.
• Taiwan's perspective: Istanbul is a common transit point for Taiwanese travelers flying to Europe, so the extreme rainfall raises the risk for layovers and itineraries; it can also serve as a point of comparison for Taiwan's own urban drainage resilience.
• Source: ABC News (Associated Press) (https://abcnews.com/International/wireStory/istanbuls-worst-floods-80-years-leave-4-dead-137314073)

6. U.S. Measles Outbreak Grows Past 4,400 Cases

• What happened: According to U.S. CDC data, there have been 4,410 measles cases this year, with 330 new cases in the past week and 451 hospitalizations nationwide. Pennsylvania, the hardest-hit state, has recorded 1,222 cases, 225 hospitalizations, and 5 confirmed measles-related deaths, with a sixth still under investigation; the CDC has dispatched epidemiologists to assist.
• Why it matters: The MMR vaccination rate among U.S. kindergartners has dropped from 95.2% in the 2019-2020 school year to 92.4% in the 2025-2026 school year, leaving roughly 280,000 kindergartners in a protection gap.
• Taiwan's perspective: Given the frequent travel between Taiwan and the U.S., getting an MMR booster before traveling and monitoring for fever after returning will be key reminders from Taiwan's travel medicine clinics going forward.
• Source: Al Jazeera (https://aljazeera.com/news/2026/10/16/us-records-4410-measles-cases-as-outbreak-grows)

7. Magnitude 6.9 Earthquake Strikes Russia's Kamchatka Peninsula

• What happened: The U.S. Geological Survey recorded a magnitude 6.9 earthquake at 3:35pm local time, about 76 kilometers northeast of Ozernovskiy at the southern tip of Russia's Kamchatka Peninsula, at a depth of 143.2 kilometers. The U.S. tsunami warning system said the deep focal depth means no tsunami is expected; no casualties or property damage have been reported so far.
• Why it matters: The magnitude 6.9 earthquake's depth of 143 kilometers lowers the tsunami risk, but seismic activity along the Pacific Ring of Fire continues to draw attention from neighboring countries.
• Taiwan's perspective: Kamchatka sits on the same Pacific Ring of Fire as Taiwan, so the Pacific Tsunami Warning Center's assessment directly determines whether Taiwan's eastern coast needs to issue a tsunami advisory.
• Source: Anadolu Agency (https://aa.com.tr/en/eurasia/magnitude-69-earthquake-strikes-russias-kamchatka-peninsula/4090494)

Closing

The biggest takeaway from today is that TSMC's record-breaking earnings report shows the AI demand boom is still accelerating its global expansion. In the coming days, keep an eye on the Fed's October policy decision, the aftermath of Istanbul's flooding, and the diplomatic fallout between the Philippines and China. I'm Mu Yan, see you tomorrow.