TSMC profit jumps on AI demand

Taiwan Semiconductor Manufacturing Co. posted a 35% increase in fourth-quarter net profit, reporting T$505.7 billion ($16.01 billion) and surpassing market expectations, as soaring demand for chips used in artificial intelligence and high-performance computing bolstered results. The figure exceeded a T$478.4 billion LSEG SmartEstimate, signaling stronger-than-expected recovery in key segments of the semiconductor market.

TSMC said revenue grew in the October–December quarter as utilization at its leading-edge fabs improved and orders tied to AI, data centers and premium smartphones remained robust. The company reported that advanced process technologies accounted for a growing share of total sales, reflecting customers’ shift toward more powerful and energy‑efficient designs. That move toward advanced nodes helped offset softer demand in certain consumer-electronics categories after a recent period of industry-wide inventory adjustments.

Executives highlighted the role of AI-related workloads in driving demand for the most sophisticated chips, noting sustained orders from major customers in cloud computing and high-performance applications. The quarter’s performance reinforced TSMC’s position as the dominant contract manufacturer for leading semiconductor designs and underscored its importance in global technology supply chains, particularly as AI investment accelerates worldwide.

Analysts and investors took the results as a positive indicator for broader chip demand, easing concerns about cyclical weakness that had weighed on the sector. The beat on profit and upbeat commentary on advanced-node adoption helped lift sentiment about the industry’s near-term prospects and TSMC’s ability to capture higher-margin business linked to next-generation computing.

Looking forward, TSMC said it expects momentum to continue, driven by AI and next-generation computing applications, but flagged several risks that could temper growth. Geopolitical tensions, macroeconomic uncertainty and customer inventory management remain potential headwinds. The company reiterated its long-term growth outlook and commitment to substantial capital investment in advanced manufacturing capacity to meet rising demand for cutting-edge process technologies.

The quarterly result also highlighted structural shifts within the semiconductor landscape: a rising concentration of revenue in advanced nodes and persistent demand from data-center customers are reshaping production priorities and capital allocation across the industry.