Perhaps I misread it. My reading was that it's not uncommon to see such high margins given that this is a software product.

Pointless argument. At present time you could argue it for every company in the world. Boeing? Sells derivatives of CAD software, not airplanes.

TSMC doesn't really write chip design software. Maybe they do at some small level but that's not their bread and butter. TSMC provides IP engineers need to design chips to be built by TSMC. That IP is used by CAD tools from major players like Cadence, Synopsys and Mentor (now Siemens, I guess). TSMC's advantage is their superior chip fabrication technology and ability to scale.