TSMC reported stronger-than-expected net profit for the fourth quarter on Thursday, as the world’s largest contract chipmaker continued to benefit from surging demand for advanced semiconductors driven by artificial intelligence.
At the same time, the company unveiled a sharply higher capital spending outlook for 2026, underscoring plans to aggressively expand manufacturing capacity to keep pace with sustained AI-related demand.
Higher capex planned as AI demand accelerates
TSMC expects capital expenditure in 2026 to range between $52 billion and $56 billion, up significantly from $40.9 billion in 2025, Chief Financial Officer Wendell Huang said during a post-earnings call. Huang cautioned that margins could come under pressure in the medium to long term as the company continues to scale up production, particularly at overseas facilities.
Chief Executive C.C. Wei echoed those concerns, warning that both capital expenditure and operating costs are set to rise meaningfully in the coming years as expansion accelerates.
Record profits and strong revenue growth
For the three months ended December 31, TSMC posted a record net profit of T$505.74 billion (around $16 billion), comfortably above Bloomberg estimates of T$467.0 billion and sharply higher than the T$374.68 billion reported a year earlier.
Quarterly revenue, which the company had disclosed earlier, climbed to T$1.046 trillion (about $33 billion) from T$868.46 billion a year ago. Huang also projected first-quarter 2026 revenue in the range of $34.6 billion to $35.8 billion, signalling continued momentum.
The results were driven by robust demand for TSMC’s most advanced chips. Products built on its 3-nanometer process accounted for more than 25% of wafer revenue, highlighting the rapid shift toward cutting-edge manufacturing nodes.
AI megatrend supports long-term outlook
Wei said demand linked to artificial intelligence is expected to remain strong in the years ahead, noting positive signals from the company’s largest customers. He added that the so-called “AI megatrend” remains firmly intact.
While TSMC’s high-performance computing segment continued to be the main earnings engine, revenue from smartphone-related chips increased modestly, rising to 32% of total revenue in the fourth quarter from 30% in the prior period. The uptick was largely attributed to stronger orders from Apple Inc, which used new TSMC-manufactured chips in its iPhone 17 lineup.
TSMC is also a crucial supplier of advanced AI processors to NVIDIA Corporation, a relationship that has significantly boosted its earnings and valuation over the past two years as global tech giants race to expand AI-focused data center infrastructure.
U.S. expansion remains a priority
Last year, TSMC announced a $165 billion investment plan in the United States to add production capacity and meet soaring demand. Much of the spending is directed toward a major manufacturing hub in Arizona, a move that also aligns with the Donald Trump administration’s push for increased domestic chip production.
The company said on Thursday that it aims to further expand U.S. output, targeting 20% to 30% of its total manufacturing capacity at its Arizona facility over time.
Widely viewed as a bellwether for global semiconductor demand and the broader AI investment cycle, TSMC’s results reinforce expectations that artificial intelligence will remain a key driver of growth across the chip industry.
