TSMC fourth-quarter profit beats estimates, soaring 35%, as AI chip demand

Taiwan Semiconductor Manufacturing Company on Thursday reported a 35% increase in fourth-quarter profit, beating estimates and hitting a fresh record as demand for artificial intelligence chips remained strong.

Here are the company’s results versus LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 1.046 trillion new Taiwan dollars ($33.73 billion), vs. NT$1.034 trillion expected
• Net income: NT$505.74 billion, vs. NT$478.37 billion expected

The world’s largest contract chipmaker has now posted year-over-year profit growth for eight consecutive quarters.

Meanwhile, TSMC’s revenue in the December quarter rose by 20.5% from a year ago to surpass NT$1 trillion, also beating forecasts.

TSMC, Asia’s largest technology company by market capitalization, has benefited greatly from the proliferation of artificial intelligence, producing advanced AI processors for clients such as Nvidia and AMD. 

The company’s high-performance computing division, which includes artificial intelligence and 5G applications, made up the majority of sales in the October-December quarter.

TSMC said advanced chips measuring 7-nanometer or smaller made up 77% of total wafer revenue during the quarter. For full-year 2025, those chips made up 74% of revenue, up from 69% in 2024.

In semiconductor technology, smaller nanometer sizes indicate more compact transistor designs, allowing faster processing speeds and greater energy efficiency.

“The demand for AI remains very strong, driving overall chip demand across the entire server industry,” Counterpoint Research senior analyst Jake Lai told CNBC, predicting that 2026 will be another “breakout year” for AI server demand. 

“With TSMC’s ongoing 2nm capacity expansion and new production contributing to revenue, along with continuous expansion of advanced packaging… TSMC is expected to maintain strong performance in 2026,” Lai said. 

However, he added that chip demand tied to consumer electronics such as smartphones and PCs could be affected by the ongoing memory shortage and price hikes.