Taiwan Semiconductor Manufacturing Company reported a sharp increase in fourth quarter profit, driven by sustained demand for artificial intelligence chips. The world’s largest contract chipmaker exceeded market expectations on both revenue and earnings, underscoring its central role in the global AI supply chain and its continued momentum heading into 2026.
Fourth Quarter Results Beat Expectations
TSMC posted a 35 percent year over year increase in net income for the December quarter, reaching NT$505.74 billion. Revenue climbed to NT$1.046 trillion, also surpassing analyst forecasts. The company has now delivered profit growth for eight consecutive quarters, highlighting consistent operational strength.
Quarterly revenue rose more than 20 percent from a year earlier, exceeding the NT$1 trillion mark for the first time. Management attributed the performance to strong demand for leading edge manufacturing technologies.
Outlook Signals Continued Growth
For the current quarter, TSMC guided revenue to a range of $34.6 billion to $35.8 billion, representing strong sequential and annual growth at the midpoint. Executives said rising demand for advanced process technologies is supporting higher profit margins and improving business visibility.
Advanced Chips Drive Revenue Mix
High performance computing, which includes artificial intelligence and 5G applications, accounted for 55 percent of total sales in the quarter. Smartphone related demand made up 32 percent. Advanced chips produced using 7 nanometer technology or smaller represented 77 percent of total wafer revenue, reflecting TSMC’s increasing focus on cutting edge products.
For full year 2025, advanced nodes contributed 74 percent of revenue, up from the prior year. Smaller nanometer designs enable faster processing and greater energy efficiency, making them essential for AI workloads.
Investment and Capacity Expansion
TSMC is accelerating development of its 2 nanometer technology, following the start of mass production last quarter. Capital expenditure is expected to rise significantly in 2026, reaching between $52 billion and $56 billion, compared with $40.9 billion in 2025. The investment will support expanded capacity and advanced packaging capabilities.
Risks and Global Expansion
While demand for AI remains strong, management acknowledged potential risks from memory shortages and rising prices in consumer electronics markets. The company also flagged global tariff policies as a possible headwind in 2026.
TSMC continues to expand internationally, with projects underway in Japan, Europe, and the United States. In Arizona, the company has acquired additional land to support new fabrication facilities. Executives noted that overseas plants may operate at lower margins than those in Taiwan, but could help serve customers and mitigate trade related risks.
Conclusion
TSMC’s latest earnings highlight its dominant position in advanced semiconductor manufacturing and its exposure to the fast growing AI market. With strong guidance, aggressive investment plans, and expanding global capacity, the company is positioning itself for continued growth, even as it navigates supply constraints and geopolitical uncertainty.