TSMC Q4 Profit Soars 35% as Demand for AI Chips Strengthens
In Focus
- TSMC Q4 profit surpassed analyst expectations
- The Taiwanese manufacturer expects Q1 2026 revenue to increase by 38%
- The company projected $56 billion in capital expenditure in 2026
Global advanced AI chip manufacturer TSMC has reported a 35% growth in Q4 profit, Reuters reported. Driven by AI demand, TSMC’s record Q4 profit surpassed analyst estimates for the period. The world’s biggest contract semiconductor manufacturer has now reported year-over-year growth for eight straight quarters.
TSMC Projects Strong Q1 2026 Revenue
The Taiwanese manufacturer predicted strong revenue in 2026, expecting its 2026 first-quarter revenue to be between $34.6 billion and $35.8 billion. This growth represents a 38% year-on-year increase driven largely by strong demand for AI technologies.
“We expect our business to be supported by continued strong demand for our leading edge process technologies,” TSMC’s Chief Financial Officer Wendell Huang noted, as cited by CNBC.
TSMC has reaped big from the rise of AI as it manufactures advanced processors for leading companies like NVIDIA and AMD. In October 2025, TSMC’s revenue surged 30% in the third quarter as demand for AI and high-performance computing rose. The company’s revenue for the July-September 2025 quarter stood at T$989.92 billion.
TSMC Reports Significant Chip Business Growth
The high-performance computing unit, which hosts its AI and 5G applications, accounted for 55% of TSMC’s Q4 revenue. The company reported that demand for smartphones represented 32% of its October-December 2025 revenue.
The semiconductor chip manufacturer also said revenue from advanced processors measuring 7-nanometer and below represented 77% of the wafer income realized in the quarter. Overall, revenue from advanced chips represented 74% of the company’s annual revenue compared to 69% generated in 2024. Last year, TSMC announced a $100 billion investment in the U.S. to boost chip production.
In the quarter ending December 2025, TSMC’s Q4 revenue exceeded NT$1 trillion, growing by 20.5% compared to the same period the previous year. The company reported NT$1.046 trillion in revenue against analyst expectations of NT$1.034 trillion. TSMC’s net income for the fourth quarter stood at NT$505.74 billion, which is higher than the projected NT$478.37 billion.
Focus on 2-Nanometer Chips
In the chip industry, smaller nanometer chips mean compact transistor designs, faster processing speeds, and higher efficiency. Most companies are shifting to the production of 2-nanometer chips.
Recently, Qualcomm confirmed that it was engaging Samsung in talks over the production of 2-nanometer chips. TSMC plans to boost its 2-nanometer offerings in 2026 after commencing mass production late last year.
“The demand for AI remains very strong, driving overall chip demand across the entire server industry. 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,” Senior Analyst at Counterpoint Research Jake Lai noted, as per CNBC.
As focus remains on advanced products, the company plans to boost TSMC capital expenditure in 2026 to $56 billion, which represents a 37% increase from last year’s $40.9 billion.
