Taiwan Semiconductor Manufacturing Company (TSMC) reported a 35% increase in fourth-quarter profit, reaching a record high due to strong demand for AI chips. Revenue was NT$1.046 trillion, beating estimates, and net income was NT$505.74 billion, surpassing expectations. TSMC has seen eight consecutive quarters of year-over-year profit growth.

In the December quarter, TSMC’s revenue rose by 20.5% to over NT$1 trillion, exceeding forecasts. The company expects revenue for the current quarter to be between $34.6 billion and $35.8 billion, up 4% sequentially. Their high-performance computing division, including AI and 5G applications, accounted for the majority of sales at 55%.

TSMC’s advanced chips measuring 7nm or smaller made up 77% of total wafer revenue in the quarter. These chips are crucial for faster processing speeds and energy efficiency. The company plans to expand its 2 nm offerings this year. TSMC’s capital expenditure is expected to reach between $52 billion and $56 billion in 2026.

Counterpoint Research predicts another “breakout year” for AI server demand in 2026. TSMC is expected to maintain strong performance with ongoing 2nm capacity expansion. However, chip demand for consumer electronics like smartphones and PCs may be impacted by memory shortages and price hikes. TSMC Chairman Wei highlighted global tariff policies as a potential risk factor in 2026.

TSMC is expanding globally with projects in Japan, Europe, and Arizona, where they are accelerating capacity expansion. The company recently purchased additional land in Arizona to support new facilities. While these expansions could mitigate the impact of global tariffs, overseas plants may operate at lower margins compared to those in Taiwan.

Read more at CNBC: TSMC extends record quarter, profit jumps 35% on robust AI chip demand