TSMC smashes forecasts with record profit, flags more US factories

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By Wen-Yee Lee, Faith Hung and Ben Blanchard

TAIPEI, Jan 15 (Reuters) - TSMC 2330.TW, the world's main producer of advanced AI chips, on Thursday posted a forecast-smashing 35% jump in fourth-quarter profit to a record high, predicted robust annual growth and flagged more U.S. manufacturing capacity was in the works.

Riding high on what it calls the "AI mega trend", TSMC said its customers, and their customers, were "providing strong signals" and requesting capacity, forecasting 2026 revenue would rise nearly 30% in U.S. dollar terms.

The Taiwanese company, which counts Nvidia NVDA.O and Apple AAPL.O as major customers, announced plans last year to invest $100 billion in the U.S., on top of $65 billion pledged for three plants in the state of Arizona, one of which is up and running.

The boom in artificial intelligence has helped TSMC, Asia's most valuable listed company, outshine its rivals. It now boasts a market capitalisation of around $1.4 trillion - more than twice that of South Korea's Samsung Electronics 005930.KS.

U.S. PLANS

TSMC is speeding up capacity expansion in Taiwan and in Arizona, where Chief Executive C.C. Wei said the company is applying for permits to begin the construction of a fourth factory and the first advanced packaging plant.

Additional land has been purchased in Arizona, he told a press briefing.

"That gives you a hint as to what we plan to do, because we need it. We are going to expand many fabs over there, and this gigafab cluster can help us to improve the productivity, to lower the cost and to serve our customers in the U.S. better."

U.S. Secretary of Commerce Howard Lutnick said in a podcast released last week that TSMC was set to invest more in the country. The New York Times has reported that the Trump administration is nearing a trade deal with Taiwan to reduce its tariff rate to 15% from 20% and wants TSMC to commit to building at least five more facilities in Arizona.

Taiwan signalled on Thursday that a tariff deal with the United States could come soon.

STRONG PROFIT

TSMC's capital spending could jump as much as 37% this year to $56 billion, and will increase "significantly" in 2028 and 2029 given AI demand, the company said.

Asked about concerns of an AI bubble and whether demand was real, Wei struck a note of caution, saying TSMC needed to spend carefully.

"We're also very nervous about it. We're investing $52-$56 billion in capex. If we did not do it carefully, that would be a disaster for TSMC for sure."

Net profit for the last three months of 2025 climbed to T$505.7 billion ($16 billion), its seventh straight quarter of double-digit growth and well ahead of a T$478.4 billion LSEG SmartEstimate. First-quarter revenue could surge as much as 40% from a year earlier to $35.8 billion, TSMC said.

Ben Barringer, head of technology research at money-management firm Quilter Cheviot said the results were a very positive start to the earnings season for the tech giants.

"While the likes of Nvidia, Broadcom and AMD fight it out for chip supremacy, TSMC ultimately benefits as the key manufacturer of all their chips," he added.

TSMC's Taipei-listed shares jumped 44% last year, outperforming a 25.7% rise for the broader market .TWII. They are up around 9% so far this year.

($1 = 31.5920 Taiwan dollars)

(Reporting by Wen-Yee Lee, Faith Hung and Ben Blanchard; Additional reporting by Yimou Lee; Editing by Anne Marie Roantree, Edwina Gibbs and William Mallard)

((wen-yee.lee@thomsonreuters.com))