A surge in AI-driven demand has pushed TSMC’s profits and investment plans higher, reinforcing its position as one of the world’s most advanced semiconductor producers.
Taiwan-based TSMC, the world’s largest semiconductor producer, plans to increase its capital spending by as much as 40% this year after it reported a 35% jump in its net profit for the latest quarter thanks to the boom in artificial intelligence, the company said on Thursday.
The east Asian island nation produces over 60% of the world’s semiconductors and over 90% of the most advanced chips, most of which are made by TSMC. That concentration that makes it a critical choke point for the advanced chips that power phones, cars, cloud computing, and now AI.
As a major supplier to companies including Nvidia and Apple, TSMC reported a net profit of 506bn (€13.7bn) new Taiwan dollars for the October-December quarter, a 35% surge from a year earlier.
TSMC said Thursday that its revenue in the last quarter increased 21% from a year earlier to more than 1.046tr (€28.4bn) new Taiwan dollars.
Success-backed expansion
TSMC said it plans to boost its capital expenditure budget to up to $56bn (€48.1bn) for 2026, up from about $40bn (€34.4bn) last year. The company’s Taiwan-listed shares have climbed more than 6% since the beginning of the year, reflecting its strong position in increasingly AI-driven global markets.
“We expect our business to be supported by continuous strong demand for our leading edge process technologies,” Wendell Huang, TSMC's chief financial officer, said in a conference call. He said spending would be “significantly higher” in the next three years.
Asked about concerns over an AI bubble — as critics point to ballooning investments which might not pay off in the mid or longer term — TSMC chairman and CEO C.C. Wei said he is confident that the growing demand from customers is real.
“I'm also very nervous about it, you bet,” said Wei. “AI is real. Not only real, it's starting to grow into our daily life."
With a market capitalisation of about $1.7tr (€1.5tr), TSMC is one of Asia’s most valuable companies.
Alphabet, Google’s parent, passed the $4 trillion (€3.44tn) market capitalisation mark this month, the fourth Big Tech company to hit that mark after Nvidia, Apple, and Microsoft.
TSMC has pledged around $165 billion (€141.7bn) of investments in the US and said on Thursday it’s speeding up construction of new plants in Arizona, looking to create a fabrication plant cluster and meet strong demand from clients.
A primary beneficiary of AI, given its dominant share in cutting-edge chip manufacturing, TSMC’s outlook remains optimistic, analysts from Morningstar said in a recent report.
“It is immune from market share shifts as almost every AI company relies on TSMC to make chips ranging from application-specific integrated circuits to GPUs (graphics processing units),” the Morningstar analysts said.
TSMC also has strong buffers with “deep-pocketed” customers, they said, even if there are any short-term drops in demand.
