Taiwan Semiconductor Manufacturing Company Ltd (TSM  ), a key supplier to tech giants like Apple Inc (AAPL  ) and Nvidia Corp (NVDA  ), reported a less-than-expected decline in its third-quarter revenue, thanks to robust demand from the artificial intelligence sector.

The company posted a revenue of NT$546.7 billion ($17 billion), an 11% drop from the previous year, yet surpassing the anticipated NT$531.5 billion.

The surge in AI has particularly benefited TSMC, with data centers driving the demand for AI chips, indicating a positive trajectory amidst supply constraints and concerns of an extended industry-wide downturn, Bloomberg reports.

TSMC is crucial in manufacturing Nvidia's AI accelerator chips, which are highly demanded to train extensive data models.

The company's advanced packaging service is also witnessing increased demand, promising an uplift in sales even as the semiconductor industry grapples with an excess inventory.

TSMC collaborated with Nvidia to drive the development of silicon photonics to revolutionize data transmission in the semiconductor sector.

Silicon photonics merges laser and silicon technology, offering a superior alternative to traditional copper cables by facilitating faster, more secure data transfer by integrating light with electrical transmission.

Price Action: TSM shares traded higher by 1.34% at $87.20 premarket on the last check Friday.