TSMC profit rockets 35% to record high on AI chip demand
Taiwan Semiconductor Manufacturing Company reported a 35 percent increase in fourth-quarter profit on Thursday, achieving a record high that exceeded estimates due to strong demand for artificial intelligence chips.
The company’s results compared to LSEG SmartEstimates, which weight forecasts from more consistently accurate analysts, appear as follows:
- Revenue: NT$1.046 trillion (US$33.73 billion), versus NT$1.034 trillion expected.
- Net income: NT$505.74 billion, versus NT$478.37 billion expected.
TSMC, the world’s largest contract chipmaker, has achieved year-over-year profit growth for eight consecutive quarters. Revenue in the October-December period increased 20.5 percent from the prior year, surpassing the NT$1 trillion threshold and analyst forecasts.
During the earnings call, executives projected current-quarter revenue between $34.6 billion and $35.8 billion, reflecting a four percent sequential rise. TSMC CFO Wendell Huang stated, “We expect our business to be supported by continued strong demand for our leading-edge process technologies.”
As Asia’s largest technology company by market capitalization, TSMC has gained substantially from artificial intelligence expansion by producing advanced AI processors for clients including Nvidia and AMD. The high-performance computing division, encompassing artificial intelligence and 5G applications, comprised 55 percent of sales in the fourth quarter. Smartphone demand represented 32 percent of sales.
Advanced chips at 7 nanometer or smaller accounted for 77 percent of total wafer revenue during the quarter. TSMC projects these chips to constitute 74 percent of full-year 2025 revenue, an increase from 69 percent in 2024. In semiconductor technology, smaller nanometer measurements enable more compact transistor designs, which support faster processing speeds and greater energy efficiency.
TSMC initiated mass production of its 2 nanometer offerings last quarter and plans further capacity ramp-up this year. Capital expenditure will expand to between $52 billion and $56 billion in 2026, compared to $40.9 billion in 2025, as the company emphasizes advanced products.
Counterpoint Research senior analyst Jake Lai told CNBC, “The demand for AI remains very strong, driving overall chip demand across the entire server industry.” He predicted 2026 as another “breakout year” for AI server demand. Lai added, “With TSMC’s ongoing 2 nm capacity expansion and new production contributing to revenue, along with continuous expansion of advanced packaging… TSMC is expected to maintain strong performance in 2026.”
Lai cautioned that chip demand linked to consumer electronics, such as smartphones and PCs, faces potential effects from ongoing memory shortages and price hikes.