Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported a sharp rise in quarterly earnings as demand for advanced processors used in artificial intelligence systems continued to accelerate. The company said its October–December net profit climbed 35% year over year to 506 billion New Taiwan dollars (about $16 billion), exceeding market expectations.
Revenue for the quarter increased 21% year over year to more than 1.046 trillion New Taiwan dollars (about $33 billion), reflecting continued strength in leading-edge manufacturing as major technology firms expand data center capacity and upgrade AI hardware.
TSMC is a critical supplier to companies including Nvidia and Apple, and its results have become a closely watched indicator of broader investment trends in AI computing. Alongside TSMC’s performance, several large platform companies—such as Microsoft, Meta, and Alphabet—have signaled substantial capital outlays to build or expand AI infrastructure.
Capital Budget Set to Rise as Investments Accelerate
Following the quarterly update, TSMC outlined plans for a sizeable increase in spending, reflecting confidence that demand for its most advanced manufacturing processes will remain robust. The company said it expects capital expenditures of $52 billion–$56 billion in 2026, up from roughly $40 billion in the prior year—an increase approaching 40% at the top end of the range.
On its earnings call, CFO Wendell Huang pointed to sustained demand for “leading edge” process technologies, while also indicating that investment levels are expected to stay elevated over the next several years as the company expands capacity and upgrades tools to keep pace with customer roadmaps.
TSMC’s share price has also reflected its central role in AI supply chains. The company’s Taiwan-listed shares have risen 59% over the past 12 months, according to the AP report, as investors weighed both near-term earnings momentum and longer-term capacity expansion plans.
U.S. Expansion and Policy Support for New Fabs
Beyond Taiwan, TSMC has been expanding its manufacturing footprint abroad, with particular attention on the United States. The company has said it has pledged around $165 billion in investments in the U.S. and is accelerating construction of new facilities in Arizona, where it aims to develop a cluster of fabrication plants to serve demand from global customers.
TSMC’s U.S. build-out has also intersected with Washington’s push to strengthen domestic semiconductor production. In November 2024, the U.S. Department of Commerce announced a proposed package for TSMC Arizona that included up to $6.6 billion in direct funding and up to $5 billion in proposed loans under the CHIPS and Science Act framework.
Officials have framed the combination of corporate investment and public-sector incentives as a way to diversify supply chains and reduce geographic concentration in advanced chip production. For TSMC, the Arizona project is also designed to bring production closer to major customers that want additional manufacturing resilience for high-performance processors used in data centers and other advanced systems.
Market Value, AI Bubble Questions, and Outlook
TSMC’s expanding influence is also visible in its market valuation. The company’s market capitalization was cited at roughly $1.4 trillion, making it Asia’s most valuable listed company, ahead of other regional giants.
At the same time, the surge in investment across the AI ecosystem has revived questions about whether spending could outpace profitable use cases. Addressing that concern, Chairman and CEO C.C. Wei said he sees customer demand as genuine, while acknowledging heightened attention around the scale of the current buildout. In comments reported by AP, Wei said, “AI is real,” describing it as increasingly embedded in everyday life.
Analysts have also emphasized that TSMC’s position is reinforced by the breadth of customers relying on its most advanced manufacturing. The company’s earnings and spending plans, however, remain tied to how quickly AI deployments translate into durable, multi-year demand for cutting-edge processors—an issue that investors are likely to keep testing as technology firms continue to ramp capacity.
