The world’s top chip maker posted its fourth straight record quarter on surging AI demand.
The artificial intelligence boom is not slowing down, and Taiwan Semiconductor Manufacturing Company’s latest earnings report makes that unmistakably clear. TSMC, the world’s largest contract manufacturer of advanced chips, reported a 58% leap in first-quarter profit today, delivering its fourth consecutive record quarter and its eighth straight period of double-digit growth.
Net income for the three months ending in March reached NT$572.48 billion, the equivalent of roughly $18.2 billion, comfortably beating analyst expectations. Revenue came in at NT$1.134 trillion, or approximately $35.9 billion, also ahead of forecasts and representing a 35% year-over-year increase.
What is driving TSMC’s record run
The short answer is artificial intelligence, and a lot of it. TSMC’s high-performance computing division, which encompasses AI and 5G applications, climbed to 61% of total revenue in the first quarter. Advanced chips defined as 7-nanometer or smaller now account for roughly 74% of TSMC’s total wafer revenue, with sub-3-nanometer shipments alone making up 25% of sales, up sharply from just 6% in the third quarter of 2023.
TSMC’s CEO C.C. Wei described AI-related demand during an analyst call as extremely robust, adding that advances in the technology are consistently driving increased computation needs and therefore greater demand for the company’s products. He expressed strong conviction in what he characterized as a multi-year AI megatrend, one he believes will continue to make semiconductor demand fundamentally durable.
Counterpoint Research senior analyst William Li told CNBC that AI has pushed TSMC’s manufacturing capacity to its limits, describing a sold-out environment he expects to define the semiconductor industry throughout 2026.
A raised forecast and expanded production plans
With momentum clearly on its side, TSMC raised its full-year 2026 revenue growth forecast from close to 30% to more than 30% in U.S. dollar terms. For the current quarter, the company projects revenue of between $39 billion and $40.2 billion, a roughly 10% sequential increase from the first quarter and significantly above the $30.1 billion posted in the same period a year ago.
Capital expenditure guidance was also revised upward. TSMC now expects to spend at the high end of its previously stated $52 billion to $56 billion range for the year, reflecting both its expansion commitments and confidence that demand will remain strong. To meet that demand, the company is expanding its 3-nanometer production capacity across three regions: 1. Taiwan, 2. the United States and 3. Japan, with mass production at greater scale targeted for 2027 and 2028. Its U.S. expansion is part of a sweeping $165 billion investment in chip manufacturing facilities in Arizona.
Supply chain risks and rising competition
Not everything in TSMC’s picture is uncomplicated. The ongoing conflict in the Middle East has raised concerns about potential disruptions to supplies of helium and hydrogen, both essential materials in semiconductor production. TSMC executives moved to ease investor concern today, stating the company maintains safety stock on hand and sources those materials from multiple suppliers across different regions, with no near-term operational impact expected.
Competition is also growing. Elon Musk announced last month that Tesla plans to build a facility in Austin described as an advanced AI chip complex, and Intel confirmed last week it would join that project. Wei addressed the development with a measured response, acknowledging that TSMC does not underestimate rivals while noting there are no shortcuts in this industry. Building a new fabrication plant takes two to three years, and both Tesla and Intel remain TSMC customers.
Why the numbers matter beyond the balance sheet
TSMC’s market capitalization now stands at approximately $1.7 trillion, nearly double that of South Korean rival Samsung Electronics. Its Taipei-listed shares have gained 35% so far this year. Nvidia, whose chips TSMC manufactures, has now surpassed Apple as the company’s largest customer, a shift that captures precisely how central AI infrastructure has become to the global technology economy.
For investors and industry watchers alike, TSMC’s results serve as one of the clearest available readings of where AI demand actually stands. And right now, by every measure the company tracks, it is running at full speed.
SOURCE: yahoo finance
Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author and publication are not registered investment advisors and do not provide personalized investment recommendations.