TLDR
- Fourth-quarter profit hit NT$505.74 billion, topping forecasts and rising 35% year-over-year
- Revenue of NT$1.046 trillion exceeded estimates as AI chip demand stayed strong
- Capital spending for 2026 projected between $52-56 billion, up 25% from prior year
- Advanced chips of 7nm or smaller generated 77% of Q4 wafer revenue
- Management expects approximately 30% revenue growth in 2026
TSMC delivered a blowout fourth quarter with net income reaching NT$505.74 billion, beating analyst expectations. The 35% year-over-year gain set a fresh company record.
Revenue for the December quarter totaled NT$1.046 trillion ($33.73 billion), surpassing forecasts and climbing 20.5% from the previous year. The chipmaker extended its winning streak to eight consecutive quarters of profit growth.
Taiwan Semiconductor Manufacturing Company Limited, TSM
The company produces advanced processors for clients including Nvidia and AMD. Its high-performance computing segment, covering AI and 5G applications, captured 55% of quarterly sales. Smartphone chips contributed 32% of revenue.
Investment Surge Signals AI Confidence
TSMC laid out ambitious capital expenditure plans for 2026, targeting $52 billion to $56 billion in spending. The range represents a jump of at least 25% from the $40.9 billion invested in 2025.
The hefty investment reflects management’s belief in sustained AI demand. CEO C.C. Wei tackled investor doubts head-on during the earnings call. “You’re trying to ask us whether AI demand is real or not. I’m also very nervous about it,” Wei admitted. “We’re investing $52 billion to $56 billion in capex, right? If we don’t do it carefully, that’d be a big disaster for TSMC.”
CFO Wendell Huang projected current-quarter revenue between $34.6 billion and $35.8 billion. The midpoint indicates 38% year-over-year expansion and 4% sequential growth.
TSMC anticipates full-year 2026 revenue will climb near 30%, outpacing average analyst forecasts. The company crossed $100 billion in annual revenue for the first time in 2025.
Chips measuring 7-nanometer or smaller accounted for 77% of wafer revenue in the fourth quarter. These advanced products represented 74% of 2025 revenue, up from 69% the year before.
The manufacturer is scaling up production of its newest 2-nanometer technology after launching mass production in the prior quarter. These chips deliver superior speed and energy efficiency compared to older designs.
Obstacles in the Pipeline
A tight memory chip market could create complications for the semiconductor sector. Suppliers have focused on high-bandwidth memory for AI processors, squeezing availability for consumer electronics.
Wei brushed aside concerns about TSMC’s vulnerability. The company targets high-end smartphones, which demonstrate less sensitivity to memory cost fluctuations.
Tariff uncertainty looms as another potential challenge. TSMC is expanding its manufacturing presence across Japan, Europe, and the United States to reduce geographic risk.
The chipmaker is expected to feature prominently in a forthcoming US-Taiwan trade agreement. Additional facility commitments may supplement existing plans for up to $165 billion in US investment.
Counterpoint Research senior analyst Jake Lai forecasts another breakout year for AI server demand in 2026. “With TSMC’s ongoing 2nm 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 said.
Equipment supplier ASML Holding rallied 7.6% to a record high in European markets after TSMC’s announcement. The Dutch company’s market value surged above $500 billion on investor optimism.
