TSMC Earnings: Record Profit on AI Chip Demand
TSMC earnings posted a record quarterly profit and raised 2026 capex guidance to $52.0-$56.0 billion, reinforcing flows into AI-focused semiconductors.
KEY TAKEAWAYS
- Net profit rose 58.0% year-over-year to a record level.
- Revenue increased to $35.6-$35.7 billion, up 35.0% year-over-year.
- Raised 2026 capex guidance to $52.0-$56.0 billion, signaling multiyear AI investment.
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Taiwan Semiconductor Manufacturing Co. (TSMC) reported a record quarter on April 16, 2026, with earnings reflecting strong global demand for AI processors. Management raised investment plans, signaling confidence in a multi-year AI-driven cycle.
Quarter Results and Margins
TSMC’s first-quarter net profit rose 58.0% year-over-year to a record level, while revenue increased 35.0% to $35.6–$35.7 billion. This marked the fourth consecutive quarter of record earnings, driven by sustained demand for AI-focused chips and high-performance computing workloads.
The company projected a first-quarter gross margin of 64.0% and expected earnings per share to rise about 55.0% year-over-year. March monthly revenue reached 415.2 billion New Taiwan dollars, up 45.2% from the prior year. The margin outlook exceeds the full-year 2025 gross margin of 59.9%, reflecting the profitability of a richer product mix and advanced-node sales.
Guidance, Capital Plans, and Risks
TSMC raised its 2026 capital expenditure guidance to $52.0–$56.0 billion, up from $40.9 billion in 2025, targeting roughly 30.0% revenue growth for the year. Management attributed the increase to sustained AI infrastructure demand and the need to expand capacity for advanced manufacturing processes.
Executives expect AI-related revenue to grow at a compound annual rate exceeding 50.0% from 2024 through 2029. AI accelerators now account for more than 55.0% of revenue, and high-performance computing represented 58.0% of 2025 sales. This shift toward data-center workloads explains the focus on chips optimized for AI rather than legacy PC or mobile markets.
TSMC reported full-year 2025 revenue of $122.4 billion and earnings per share of $10.65, establishing a baseline as it scales AI chip capacity. Advanced nodes remain central to the roadmap: 3-nanometer and 5-nanometer processes accounted for over 60.0% of wafer sales. Major customers include Apple, Nvidia, Advanced Micro Devices, and Broadcom. Analysts project Nvidia could surpass Apple as TSMC’s largest customer by revenue in 2026, reflecting the growing concentration on AI accelerator makers.
Early technical reports indicate 2-nanometer process yields range from 65.0% to 80.0%. The expanded capital program will support advanced manufacturing and early development of a 1.6-nanometer process. Yield improvements will affect how quickly new capacity comes online and TSMC’s ability to fulfill large hyperscaler orders.
The company also highlighted geopolitical supply risks tied to recent Middle East tensions. The blockade of the Strait of Hormuz, effective March 4, 2026, threatens Taiwan’s energy imports. Taiwan depends on about 97.0% imported energy, with roughly 37.0% of its power grid reliant on Middle Eastern liquefied natural gas. Domestic LNG reserves would last about 11 days without foreign supplies. Meanwhile, helium prices have roughly doubled since the conflict began, pressuring advanced manufacturing processes that rely on the gas.
