TSMC Posts Record Q4 Profit as AI Chip Demand Soars
Taiwan Semiconductor reports a 35% jump in quarterly profit, driven by strong demand for AI and advanced chips.
Taiwan Semiconductor Manufacturing Company (TSMC) delivered another record quarter, reporting a 35% rise in fourth-quarter profit as demand for artificial intelligence chips surged. The results beat market expectations, with revenue reaching NT$1.046 trillion ($33.73 billion) and net income hitting NT$505.74 billion, surpassing LSEG SmartEstimates forecasts.
This marks TSMC’s eighth consecutive quarter of year-over-year profit growth. Revenue in the December quarter rose 20.5% from a year earlier, exceeding NT$1 trillion and topping analyst projections.
Looking ahead, TSMC expects first-quarter revenue between $34.6 billion and $35.8 billion, up roughly 4% sequentially and 38% year-over-year at the midpoint. “We anticipate continued strong demand for our leading-edge process technologies,” said CFO Wendell Huang, noting that profit margins are expanding.
TSMC, Asia’s largest tech firm by market cap, has benefited from the boom in AI, producing high-performance processors for companies like Nvidia and AMD. Its high-performance computing division — which includes AI and 5G applications — accounted for 55% of sales in Q4, while smartphones contributed 32%.
Advanced chips with 7-nanometer or smaller nodes represented 77% of wafer revenue for the quarter, up from 74% for the full year 2025. TSMC aims to ramp up production of its cutting-edge 2 nm chips in 2026, following last quarter’s mass production launch.
Capital expenditure for 2026 is projected between $52 billion and $56 billion, up from $40.9 billion in 2025, reflecting the company’s continued investment in advanced technology.
“AI demand remains very strong, boosting chip sales across the server industry,” said Counterpoint Research analyst Jake Lai, predicting 2026 will be another “breakout year” for AI-driven server growth. He added that consumer electronics demand could face headwinds from memory shortages and higher prices, though high-end smartphones remain resilient.
CEO C.C. Wei noted potential risks from global tariffs but emphasized TSMC’s focus on advanced markets. Expansion projects in Japan, Europe, and Arizona are underway, though overseas facilities may operate at lower margins compared to Taiwan.
Comments
2AI is clearly fueling TSMC’s growth. The 2nm expansion will be a game-changer.
Interesting to see TSMC maintain strong margins despite memory shortages. Smart focus on high-end devices.