TSMC extends record quarter, profit jumps 35% on robust AI chip demand

Taiwan Semiconductor Manufacturing Firm on Thursday reported a 35% improve in fourth-quarter revenue, beating estimates and hitting a contemporary document as demand for synthetic intelligence chips remained sturdy.

Listed below are the corporate’s outcomes versus LSEG SmartEstimates, that are weighted towards forecasts from analysts who’re extra constantly correct:

• Income: 1.046 trillion new Taiwan {dollars} ($33.73 billion), vs. NT$1.034 trillion anticipated
• Internet earnings: NT$505.74 billion, vs. NT$478.37 billion anticipated

The world’s largest contract chipmaker has now posted year-over-year revenue development for eight consecutive quarters.

In the meantime, TSMC’s income within the December quarter rose by 20.5% from a yr in the past to surpass NT$1 trillion, additionally beating forecasts.

In an earnings name, TSMC executives guided income for the present quarter to hit between $34.6 billion and $35.8 billion, up 4% sequentially, or up 38% year-over-year on the midpoint. 

“We count on our enterprise to be supported by continued sturdy demand for our vanguard course of applied sciences,” mentioned TSMC’s Chief Monetary Officer Wendell Huang throughout an earnings name, including that the corporate’s revenue margins have been rising.

TSMC, Asia’s largest know-how firm by market capitalization, has benefited tremendously from the proliferation of synthetic intelligence, producing superior AI processors for shoppers reminiscent of Nvidia and AMD. 

The corporate’s high-performance computing division, which incorporates synthetic intelligence and 5G functions, made up the vast majority of gross sales within the October-December quarter at 55%. Demand from smartphones made up 32% of gross sales.

TSMC mentioned superior chips measuring 7-nanometer or smaller made up 77% of whole wafer income through the quarter. For full-year 2025, these chips made up 74% of income, up from 69% in 2024.

In semiconductor know-how, smaller nanometer sizes point out extra compact transistor designs, permitting sooner processing speeds and larger power effectivity.

The corporate is trying to additional ramp up its cutting-edge 2 nm choices this yr, after rolling out mass manufacturing final quarter.

With TSMC additional leaning into its superior merchandise, it mentioned that its capital expenditure was anticipated to succeed in between $52 billion and $56 billion in 2026, as in comparison with $40.9 billion in 2025.

“The demand for AI stays very sturdy, driving total chip demand throughout all the server business,” Counterpoint Analysis senior analyst Jake Lai instructed CNBC, predicting that 2026 might be one other “breakout yr” for AI server demand. 

“With TSMC’s ongoing 2nm capability growth and new manufacturing contributing to income, together with steady growth of superior packaging… TSMC is predicted to take care of sturdy efficiency in 2026,” Lai mentioned. 

Nevertheless, he added that chip demand tied to shopper electronics reminiscent of smartphones and PCs may very well be affected by the continued reminiscence scarcity and value hikes.

Throughout the earnings name on Thursday, TSMC Chairman and Chief Government Officer C.C. Wei acknowledged the reminiscence scarcity however argued that TSMC is concentrated on high-end smartphones, that are much less delicate to the reminiscence costs.

Nevertheless, Wei flagged international tariff insurance policies as a possible threat issue headed into 2026.

TSMC has been increasing globally in recent times, with main tasks underway in Japan, Europe, and Arizona, the place it’s accelerating capability growth.

Chief Government C.C. Wei mentioned Thursday that the corporate not too long ago bought extra land in Arizona to help new amenities. “We’re going to increase many fabs over there, and this gigafab cluster may also help us to enhance the productiveness, to decrease the associated fee and to serve our clients within the U.S. higher,” he added.

Whereas these expansions might assist reduce the impression of world tariffs in markets such because the U.S., the corporate has additionally warned that abroad crops will function at diluted margins in comparison with these in Taiwan.