TLDR
- Net income climbed 35% to NT$505.74 billion in Q4, exceeding analyst predictions
- Quarterly revenue of NT$1.046 trillion topped estimates, marking eighth straight profit increase
- 2026 capital expenditure guidance set at $52-56 billion, up from $40.9 billion in 2025
- AI and high-performance computing drove 55% of sales in the quarter
- Full-year 2026 revenue expected to grow approximately 30%
TSMC reported fourth-quarter net income of NT$505.74 billion, surpassing analyst expectations and jumping 35% from the year-ago period. The performance represents a new record for the world’s largest contract chipmaker.
TSMC Q4’25 Earnings Highlights:
✅ Revenue beat — $33.73B vs $33.3B est
✅ Gross margin beat — 62.3% vs 60.5% est
✅ Operating margin beat — 54.0% vs prior 49–51% guide
✅ Net profit beat — $16.30B vs $15.2B est👉 TSMC $TSM smashed expectations across the board, signaling… pic.twitter.com/6z22KlZkAo
— Trader Edge (@Pro_Trader_Edge) January 15, 2026
Quarterly revenue reached NT$1.046 trillion ($33.73 billion), climbing 20.5% year-over-year. The results mark the company’s eighth consecutive quarter of profit growth as demand for AI processors remains robust.
Taiwan Semiconductor Manufacturing Company Limited, TSM
The Taiwanese manufacturer produces chips for major technology companies like Nvidia and AMD. High-performance computing, including AI applications, accounted for 55% of sales during the October-December period. Smartphone-related revenue made up 32% of the total.
Aggressive Expansion Plans
TSMC unveiled plans to spend between $52 billion and $56 billion on capital expenditures in 2026. The guidance represents at least a 25% increase from the $40.9 billion spent in 2025.
The investment underscores management’s confidence in sustained AI chip demand. CEO C.C. Wei acknowledged investor concerns 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 said. “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 provided first-quarter 2026 revenue guidance of $34.6 billion to $35.8 billion. The midpoint implies 38% growth compared to the prior year and a 4% sequential increase.
For the full year, TSMC expects revenue to expand close to 30%. The projection exceeds average analyst estimates and reflects ongoing demand for advanced semiconductor technology.
Advanced chips measuring 7-nanometer or smaller represented 77% of total wafer revenue in the fourth quarter. These cutting-edge products made up 74% of 2025 revenue, compared to 69% in 2024.
The company began mass production of 2-nanometer chips last quarter and is accelerating output this year. Smaller chip designs enable faster processing and better power efficiency.
Industry Headwinds Emerge
TSMC faces potential challenges from a memory chip shortage affecting the broader electronics industry. Manufacturers have prioritized high-bandwidth memory for AI applications, creating supply constraints for other products.
Wei said the shortage won’t derail TSMC’s business. The company concentrates on premium smartphone chips, which prove less sensitive to memory price increases.
Tariff policies present another uncertainty for 2026. TSMC is building facilities in Japan, Germany, and Arizona to diversify its manufacturing footprint.
The chipmaker may announce additional US investments as part of an expected trade deal between Washington and Taipei. Current plans call for up to $165 billion in American investments.
Counterpoint Research senior analyst Jake Lai expects 2026 to deliver another strong year for AI server demand. “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 noted.
Supplier ASML Holding saw its stock surge 7.6% to a record in European trading following TSMC’s results. The equipment maker’s market capitalization pushed past $500 billion.
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