Pay attention to the positive developments in the semiconductor sector! On the afternoon of January 15th, Taiwan Semiconductor Manufacturing (TSMC) announced its latest earnings. Its profit for the fourth quarter of 2025 surged by 35% year-over-year, not only surpassing market expectations but also setting a new record, reflecting the persistently robust demand for artificial intelligence chips.
Revenue reached NT$10.46 trillion (approximately $337.3 billion USD), exceeding the anticipated NT$10.34 trillion.
Net profit stood at NT$505.74 billion, outperforming expectations of NT$478.37 billion.
The world's largest contract chipmaker has now achieved year-over-year profit growth for eight consecutive quarters. Simultaneously, TSMC's revenue for the quarter ending December 2025 grew by 20.5% year-over-year to exceed NT$10 trillion, also surpassing market forecasts. During the earnings conference call, TSMC's management projected current-quarter revenue to reach between $34.6 billion and $35.8 billion USD, representing a sequential increase of 4%; the midpoint of this range suggests a year-over-year growth rate of approximately 38%. TSMC Chief Financial Officer Wendell Huang stated on the call, "We expect our business to continue benefiting from strong demand for our industry-leading technologies," adding that the company's profit margins have been improving. As Asia's most valuable technology company, TSMC has reaped significant rewards from the AI boom, manufacturing advanced AI processors for clients like NVIDIA and AMD. The company's High-Performance Computing (HPC) business, which encompasses AI and 5G applications, contributed 55% of total revenue in Q4 2025, making it the largest revenue source; smartphone-related demand accounted for 32%. TSMC indicated that advanced chips utilizing 7-nanometer and more refined processes constituted 77% of wafer revenue this quarter. For the full year 2025, these advanced chips made up 74% of revenue, up from 69% in 2024. In semiconductor technology, a smaller nanometer figure generally indicates more compact transistor designs, leading to faster processing speeds and higher energy efficiency. The company aims to further expand its supply capacity for its most advanced 2-nanometer products this year, following the commencement of mass production in the previous quarter. As TSMC further intensifies its focus on advanced products, it forecasts its capital expenditure for 2026 to reach $52 billion to $56 billion USD, up from $40.9 billion in 2025. Analysts commented, "AI demand remains exceptionally strong, driving overall chip demand across the entire server supply chain. With TSMC continuing to expand its 2nm capacity, expecting new capacity to contribute to revenue, and simultaneously expanding advanced packaging, TSMC is projected to maintain strong performance in 2026." However, chip demand related to consumer electronics like smartphones and PCs could be impacted by ongoing memory shortages and price increases. In today's conference call, TSMC Chairman and CEO C.C. Wei acknowledged tight memory supply but expressed confidence that TSMC's primary focus on high-end smartphones makes this segment relatively insensitive to memory price fluctuations. As a key barometer for the AI frenzy, TSMC's strong earnings and capital expenditure plans are expected to alleviate some market concerns regarding the sustainability of current data center spending. TSMC itself is also accelerating its global capacity expansion to meet future demand. Responding to an analyst's question during the call, CEO C.C. Wei said, "You are asking if our AI demand is real. I am also very nervous. We are planning to invest $52 to $56 billion in capital expenditure, right? If we are not prudent, it would be a major disaster for TSMC." Following the news release, TSMC's U.S.-listed shares surged approximately 3% in pre-market trading, fueling a sharp pre-market rally in the Nasdaq index. This also propelled shares of Dutch semiconductor equipment maker ASML to surge 7% in early trading!
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