TSMC posts a sixth straight record profit as AI chip demand keeps climbing

TSMC, or Taiwan Semiconductor Manufacturing Company, is the world's largest contract chipmaker. It doesn't sell chips under its own name. Other companies design them, and TSMC builds them.

Think of it like a print shop for the world's most complicated books. Nvidia, Apple and others write the pages. TSMC prints them, billions of times, with no typos allowed.

• Founded: 1987, as the first company built only to make chips for others.
• Key customers: Nvidia and Apple, investingLive notes.
• Market value: around US$2 trillion, which makes it Asia's most valuable company, according to investingLive.

So when TSMC has a great quarter, it tells you how much the companies behind AI, phones and computers are ordering right now.

Here's the quarter next to the same quarter a year earlier. The 2026 figures come from TSMC's release, and the 2025 comparisons come from the company's statement as carried by ANI.

By the numbers: Revenue grew 50.9% from a year earlier and 17.6% from the second quarter. Net income grew 68.7% from a year earlier and 8.0% from the second quarter.

The margins are the part that makes accountants sit up straight:

• Gross margin: 66.4%
• Operating margin: 58.7%
• Net profit margin: 51.1%

In plain words, TSMC kept more than half of every dollar it brought in as profit.

TSMC reports in New Taiwan dollars. In that currency, revenue rose 50.9% from a year earlier.

In US dollars, revenue was US$46.72 billion, up 41.2% from a year earlier and 16.2% from the second quarter, Benzinga and Crypto Briefing report. The gap comes from the exchange rate between the two currencies moving over the year. Same chips, different ruler.

Yes, on both revenue and profit.

• Revenue: Benzinga reports analysts expected US$45.62 billion. TSMC delivered US$46.72 billion.
• Earnings per ADR unit: analysts expected US$4.45, Benzinga says. TSMC reported US$4.60.
• Net income: investingLive, citing Reuters and an LSEG SmartEstimate drawn from 16 analysts, had forecast NT$746.3 billion. TSMC reported NT$763.06 billion.

The beat wasn't a total surprise. TSMC had already reported its monthly sales, which showed a record of roughly NT$1.49 trillion for the quarter, so investors were watching the forecast and spending plans more than the profit itself. Benzinga reported that TSMC's US-listed shares were 1.73% lower in after-hours trading, after rising about 41.5% this year.

Mostly from powerful chips for AI and data centers. TSMC groups them under high-performance computing, or HPC.

According to the earnings call, as summarized by Investing.com, the platforms split like this:

The newest technology is doing the heavy lifting too. Chips made on 7 nanometers or smaller brought in 79% of wafer revenue, TSMC says.

• 3-nanometer: 33%
• 5-nanometer: 28%
• 7-nanometer: 10%
• 2-nanometer: 8%

A nanometer here is a name for a generation of chipmaking, not a ruler measurement you could check with a microscope. Smaller numbers mean newer processes that fit more transistors into the same space, which usually means faster chips that use less power.

In real life When you ask an AI chatbot a question, the answer is computed on a server chip in a data center. Many of the most powerful of those chips are designed by companies like Nvidia and built in TSMC's factories in Taiwan. That's why AI spending shows up so directly in TSMC's results.

The gross margin of 66.4% was 1.3 percentage points lower than in the second quarter, Investing.com reports from the call. The main reason is the 2-nanometer ramp.

New production lines are expensive at the start. The machines are new, the yields are still improving, and the costs are spread over fewer chips. As volume grows, that usually gets better.

The catch: TSMC's factories outside Taiwan cost more to run. Investing.com's call summary says they lower the gross margin by about 2 percentage points today, and TSMC expects that effect to widen to 3 to 4 points over the next few years.

CFO Wendell Huang said in the release that the quarter "was supported by strong demand for our leading-edge process technologies."

On the call, CEO C.C. Wei was blunter, according to Investing.com's summary:

"The demand is extremely robust. We did not see any sign of slowdown."

Wei also said AI-related demand growth "probably will be higher" than the company's earlier assumption, and that the gap between supply and demand remains "quite big." Asked about profits, he said there is "no ceiling" for TSMC's profitability, but a "dramatic increase will not happen overnight."

Huang put the spending question simply: "If we do our job right, increase in revenue will outpace increase in CapEx."

TSMC's forecast for the last three months of 2026 is bigger again.

• Q4 revenue: US$52.3 billion to US$54.3 billion, the company says.
• Q4 gross margin: 65% to 67%.
• Q4 operating margin: 56.5% to 58.5%.
• Full year 2026: revenue growth of about 44% in US dollars, Investing.com reports from the call.
• Capital spending: US$60 billion to US$64 billion for 2026, unchanged from July, when TSMC raised it from a previous range topping out at US$52 billion to US$56 billion, investingLive reports.

What's next: Investing.com's call summary says TSMC expects its 2-nanometer capacity to more than double in 2027, and its second Arizona factory to reach volume production in the third quarter of 2027. investingLive reports that TSMC is investing US$265 billion in Arizona and is evaluating an investment in Texas.

Prices may also move. Benzinga cites a report from last month that TSMC plans to raise foundry prices by 3% to 6% from January 2027, with larger increases for advanced processes. TSMC did not announce price changes in its results.

The same story is playing out across the chip supply chain. A day earlier, the Dutch chip machine maker ASML said its supply for 2027 and 2028 won't fully meet demand.

• AI keeps getting built: the companies behind chatbots and AI tools are still ordering chips at record pace, so expect faster models and more AI features in apps.
• New phones and laptops ride the same wave: smartphones still make up 21% of TSMC's revenue, and the newest 2-nanometer process is ramping up for the chips inside future devices.
• Prices are worth watching: a reported foundry price increase from 2027 could, in time, reach some devices, but nothing has been confirmed by TSMC.
• No slowdown yet: if you've been waiting for the AI chip boom to cool, TSMC's own forecast says not this year.