TSMC don't sell software products

They weren't implying that, see the quote they included. OP said they hadn't seen profit margins this high, and the reply indicates that it's not uncommon to see software even higher.

It's just a useful tidbit, related to the point they specifically quoted.

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

Though perhaps you could say they sell derivatives of software products?

I'm assuming they write the best custom chip design software and that's their biggest competitive advantage (and then operational excellence and savvy business maneuvering et cetera). Though I know nothing about them just guessing as an outsider.

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.

Got it. TSMC provides an Internal Protocol that others can use to get chips built. An API for physical world. Interesting. Thank you!

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