Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker and a key supplier to Nvidia and AMD, reported a record-breaking fourth quarter, with net profit soaring 35% year-over-year to NT$505.74 billion. This result handily beat analyst expectations of NT$478.37 billion and marked the company's eighth consecutive quarter of annual profit growth.
Revenue for the October-December period climbed 20.5% to NT$1.046 trillion (approximately $33.09 billion), surpassing the NT$1.034 trillion forecast and crossing the NT$1 trillion threshold for the first time. The surge was primarily driven by relentless demand for artificial intelligence hardware. TSMC's high-performance computing unit, which includes AI and 5G chips, constituted the largest share of sales. Advanced chips with process nodes of 7 nanometers or smaller accounted for a dominant 77% of total wafer revenue in the quarter.
Analysts point to the AI data center build-out as a key catalyst. "The demand for AI remains very strong, driving overall chip demand across the entire server industry," said Counterpoint Research senior analyst Jake Lai. He added that TSMC's ongoing expansion into 2nm production and advanced packaging should support strong performance into 2026.
Looking ahead, TSMC provided a bullish outlook, forecasting first-quarter revenue could jump as much as 40% year-over-year to around $35.8 billion. The company also signaled plans to increase capital spending in 2026 by up to 37% to $56 billion, reflecting confidence in sustained demand for its advanced manufacturing technologies.
The results arrive amid geopolitical trade considerations. TSMC is central to potential U.S.-Taiwan trade discussions and continues to expand its American footprint, with plans for up to $165 billion in U.S. investment. While the AI boom propels growth, analysts note risks from potential memory shortages affecting consumer electronics like smartphones, which also represent a significant portion of TSMC's business through clients like Apple and Qualcomm.
