Taiwan Semiconductor Manufacturing Company (TSMC) has delivered a monumental fourth quarter (Q4) performance with a forecast-smashing 35% jump in profit to a record high, cementing its role as the primary engine of the global AI boom.
The impressive margin comes as the world's leading chipmaker continues to outpace rivals, with its valuation reflecting the unprecedented scale of modern compute demand.
The Taiwanese giant also posted a net profit of NT$505.7 billion (US$16 billion) for the final three months of 2025.
This result represents the company's seventh straight quarter of double-digit growth, far exceeding analyst expectations.
Looking ahead, the firm expects first-quarter revenue could surge by as much as 40% to reach $35.8 billion.
Management also projected that annual revenue for 2026 will rise by nearly 30% in U.S. dollar terms.
Expansion
To meet intensifying demand, TSMC is accelerating its expansion in the United States.
TSMC CEO C.C. Wei confirmed that the company is applying for permits to build a fourth factory and its first advanced packaging plant in Arizona.
This move follows an earlier pledge of $65 billion for three plants in the state, one of which is already operational.
Taiwan has signalled that a tariff deal with the United States could arrive shortly.
Reports suggest the new administration may be nearing a trade agreement to lower tariff rates to 15% in exchange for a commitment to build at least five more facilities.
Semiconductor dominance
While TSMC thrives, the broader semiconductor landscape shows a significant divergence in performance.
South Korea's Samsung Electronics recently announced earnings guidance for the quarter, projecting an operating profit of approximately 20 trillion won.
Although this is a nearly threefold increase from the previous year, Samsung continues to trail TSMC in valuation and advanced node yield.
Meanwhile, Intel is scheduled to report its own quarterly results next week, with analysts watching closely for signs of a turnaround in its foundry business.
TSMC remains the sole manufacturer of Nvidia’s high-performance Blackwell chips, ensuring it benefits from the hardware race regardless of which designer holds the top spot.
Risk watch
Despite the optimism, TSMC leadership is keeping a watchful eye on market sustainability.
Wei admitted that the company was "nervous" about the massive capital expenditure required to keep pace with the artificial intelligence trend.
The firm plans to invest between $52 billion and $56 billion this year to avoid being caught without enough capacity.
TSMC (NYSE: TSM) shares ended yesterday’s trading 5.3% higher at $344.41, giving it a market capitalisation of $1.39 trillion.
