Key Points
- The world’s largest contract chipmaker has now posted year-over-year profit growth for eight straight quarters.
- Advanced chips (7-nanometer and smaller) accounted for 77% of total wafer revenue, fueled by booming AI server demand.
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Taiwan Semiconductor Manufacturing Company delivered another blowout quarter, reporting a 35% jump in fourth-quarter profit that topped expectations and set a new record. The surge was driven by relentless demand for artificial intelligence chips, reinforcing the company’s central role in the global AI supply chain.
The results beat LSEG SmartEstimates, which weigh forecasts from analysts with the strongest track records:
- Revenue: NT$1.046 trillion ($33.73 billion) vs. NT$1.034 trillion expected
- Net income: NT$505.74 billion vs. NT$478.37 billion expected
This marks eight consecutive quarters of year-over-year profit growth for the world’s largest contract chipmaker.
Revenue for the December quarter climbed 20.5% from a year earlier, topping NT$1 trillion and again beating forecasts.
What’s next
On the earnings call, executives projected current-quarter revenue of $34.6 billion to $35.8 billion, representing 4% sequential growth and 38% year-over-year growth at the midpoint.
“We expect our business to be supported by continued strong demand for our leading-edge process technologies,” said CFO Wendell Huang, noting that profit margins continue to improve.
As Asia’s largest technology company by market value, TSMC has been a major beneficiary of the AI wave, manufacturing advanced processors for customers like Nvidia and AMD.
Advanced chips take center stage
High-performance computing—which includes AI and 5G—accounted for 55% of sales in the October-to-December period. Smartphones made up 32%.
TSMC said chips measuring 7 nanometers or smaller represented 77% of wafer revenue for the quarter. For full-year 2025, those advanced chips made up 74% of revenue, up from 69% in 2024.
In chipmaking, smaller nanometer sizes mean denser transistor designs, enabling faster speeds and better energy efficiency.
The company is now pushing deeper into cutting-edge manufacturing, ramping up its 2-nanometer technology after beginning mass production last quarter.
That shift is driving a major spending plan. TSMC expects capital expenditures of $52 billion to $56 billion in 2026, compared with $40.9 billion in 2025.
“The demand for AI remains very strong, driving overall chip demand across the entire server industry,” said Jake Lai, senior analyst at Counterpoint Research, who expects 2026 to be another breakout year for AI servers.
“With ongoing 2nm capacity expansion and new production contributing to revenue, along with continued growth in advanced packaging, TSMC is expected to maintain strong performance in 2026,” Lai said.
Still, he warned that demand tied to consumer electronics like smartphones and PCs could feel pressure from memory shortages and rising prices.
Risks on the horizon
During the call, Chairman and CEO C.C. Wei acknowledged the memory shortage but said TSMC’s focus on high-end smartphones should limit the impact. He also pointed to global tariff policies as a potential risk heading into 2026.
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Global expansion push
TSMC continues to expand beyond Taiwan, with major projects underway in Japan, Europe, and the United States. In Arizona, the company is accelerating capacity growth.
Wei said TSMC recently bought additional land in Arizona to support new facilities. “We are going to expand many fabs over there, and this gigafab cluster can help us improve productivity, lower costs, and better serve our U.S. customers,” he said.
While overseas expansion could help soften the impact of tariffs, TSMC has cautioned that plants outside Taiwan are expected to operate at lower margins than its domestic facilities.
Still, with AI demand showing no signs of slowing, investors appear focused on the bigger picture: TSMC remains firmly at the heart of the global chip—and AI—boom.
