TSMC profit surges 58% on AI demand as chipmaker expands 3nm capacity amid rising costs

TSMC ups revenue guidance and CapEx, buoyed by 'multiyear AI megatrend' -- warns Middle East conflict may impact profitability as costs increase

We need more fabs and tools to meet demand of AI applications, says TSMC. TSMC this week posted financial results for the first quarter of 2026 and lifted its 2026 revenue guidance and capital expenditures to the high end of its original expectations. Accelerating sales of AI accelerators and accompanying hardware increases demand for TSMC's wafers, which is why the company said it would build another 3nm-capable fab in addition to those already planned. But while the company is confident in its long-term prosperity driven by the AI megatrend, it warned about profitability due to the war in the Middle East. AI megatrend earns TSMC tens of billions in one quarter "Our conviction in the multiyear AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental," said C.C. Wei, chief executive of TSMC, during the company's earnings conference. He admitted that capacity during the quarter was 'tight,' whereas Jen-Chau Huang, TSMC's chief financial officer, confirmed 'higher-than-expected' overall capacity utilization. Indeed, the HPC segment (an ambiguous term that TSMC uses to describe everything from client PCs to high-end AI accelerators) accounted for 61% of TSMC's revenue in Q1 2026 (or approximately $21.9 billion), up from 46% in Q1 2024 (approximately $8.68 billion), which represents colossal growth in just two years. The smartphone segment accounted for 26% of TSMC's earnings in Q1 2026, whereas IoT and automotive commanded 6% and 4% of the company's revenue in the same quarter. Based on TSMC's annual report released this week, it looks like Nvidia, with its aggressive capacity booking strategy, has become TSMC's top customer, accounting for 19% of the foundry's revenue for 2025, dethroning Apple, which was responsible for 17% of TSMC's earnings for 2025. On the fabrication technologies side of matters, TSMC's 5nm-class nodes accounted for 36% of the company's wafer revenue in Q1 2026 (driven by the success of Nvidia's Blackwell AI accelerators), 3nm-class processes were responsible for 25% of the foundry's earnings, while 7nm-class technologies represented 7% of TSMC's revenue. In general, advanced nodes (7nm and below) accounted for 74% of the company's earnings. Yet, keep in mind that while TSMC is mass producing 2nm-class (N2) chips for its customers, it has not formally shipped them to clients and therefore does not recognize 2nm-related revenue. Capacity additions As Nvidia's leading AI platforms, as well as offerings from other vendors, are set to shift from TSMC's 5nm-class family of nodes (N5, N4) to 3nm-class lineup of process technologies (N3), demand for the latter is going to skyrocket this year and remain strong for years to come. To meet this demand, TSMC will add three N3-capable fabs to its lineup over the next couple of years. "Historically, we do not add additional capacity to a node once it has reached its target capacity," Wei said. "However, as a foundry, our first responsibility is to provide our customers with the most advanced technologies and necessary capacity to unleash their innovations. Based on our assessment, to meet the strong demand for AI applications, we are stepping up our CapEx investment to increase our N3 capacity." First up, the company will add a new N3-capable fab module to its Gigafab cluster at Tainan Science Park, aiming to start volume production in the first half of 2027. While TSMC has been building the fab module for some time, this is the first time it has disclosed its capabilities. Secondly, TSMC's N3-capable Fab 21 phase 2 in Arizona is on track to come online in the second half of 2027. This is the first time the foundry has clarified when Fab 21 phase 2 is set to begin making chips. TSMC's CEO also confirmed that the company had acquired the second plot of land near Fab 21 to build additional fab modules, though he never confirmed how many fab modules would be built. Thirdly, the company plans to upgrade the capabilities of its Fab 23 phase 2 (aka JASM phase 2) to 3nm by installing more advanced equipment. Originally, Fab 23 phase 2 was projected to make chips on N6 (6nm-class) and N7 (7nm-class) fabrication technologies, then TSMC pondered upgrading it to N4 (4nm-class). Now, the plan is to make it N3-capable when it comes online in 2028. The decision to add 3nm capacity was not made overnight, though it looks like TSMC expects demand for FinFET-based N3 -- its final FinFET node -- to remain strong well into the second half of the decade (it takes a year to ramp up a fab, so these three fabs will contribute meaningfully to TSMC's capacity in 2028 - 2029). Separately, the company will continue converting N5-capable facilities into N3-capable fabs in Taiwan and make some of its fabs capable of building chips on N7, N5, and N3 nodes. "In addition to all the new fabs, we continue to convert 5nm tools to support 3nm capacity in Taiwan," Wei added. "We are also leveraging our manufacturing excellence to drive greater productivity across our fab in all locations to generate more wafer output. We are also focusing on capacity optimization across nodes, including flexible capacity support among N7, N5, and N3 nodes." One of the main challenges for TSMC's expansion is to get fab tools to support new capacity as fast as possible, but this is not easy, as leading suppliers of semiconductor production equipment are also constrained in terms of capacity. "We try very hard to speed it up and pull in all the equipment as we can, [but] our supply is very tight," Wei said. "Demand is continuing to increase, so we continue to work with our suppliers to speed it up." As far as TSMC's N2 and A16-capable capacity is concerned, the company is currently ramping Fab 20 in Hsinchu Science Park and Fab 22 in Kaohsiung Science Park. While the capacity of the former will remain largely intact in the coming years, Fab 22 will gain capacity aggressively over time, according to Global Semi Research, though TSMC did not touch upon N2 capacity expansion during the earnings call. Another record quarter, but there may be hiccups TSMC's first quarter revenue reached $35.9 billion, an increase of 40.6% year-over-year, and a 6.4% rise over the previous quarter. The company's net income totaled $18.2 billion, which is the company's highest net profit for a quarter, while its gross margin was 66.2%. TSMC expects its Q2 2026 revenue to be between $39 billion and $40.2 billion, which is a 32% year-over-year growth. "Our business in the first quarter was supported by strong demand for our leading-edge process technologies," said Wendell Huang, Senior VP and Chief Financial Officer of TSMC. "Moving into second quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies." In addition, the company indicated that for the full year 2026, it expects revenue to increase to over 30% (up from its original expectations of around 30%) over the previous year to approximately $158 billion, which gives it an opportunity to increase its CapEx budget towards the high-end of its guidance between $52 billion and $56 billion. Meanwhile, TSMC warned that its costs may increase due to the ongoing war in the Middle East. "In addition, given the recent situation in the Middle East, prices for certain chemicals and gases are likely to increase," said Huang. "Based on our current assessment, there may be impact to our profitability, but it is too early to quantify the impact." Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

TSMC's Profit Surges 58% On AI-Driven Chip Demand

Taiwan Semiconductor Manufacturing Co. booked a 58% surge in profit, a sign that the Middle East war in its first few weeks did not depress booming AI investment. The main chipmaker to Nvidia Corp. and Apple Inc. reportedBloomberg Terminal net income for the March quarter of NT$572.5 billion ($18 billion), versus the average analysts' projection of NT$542.4 billion. TSMC this month posted a better-than-anticipated 35% jump in revenue. The results may help quell concerns that a prolonged crisis in the Middle East will dampen demand for power-hungry AI data centers and gadgets like the iPhone. The war has put pressure on global shipping routes and energy prices, and investors are looking for clues as to whether its impact will spread to tech giants' spending plans. TSMC and its top customers such as Nvidia face increasing skepticism they can keep growing at current rates, despite pledges from Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. to allocate $650 billion for AI expenditures this year. After explosive sales turned Nvidia into the world's most valuable company and TSMC the biggest company in Asia, investors are seeking assurances that booming AI spending can be maintained. There is also speculation that a prolonged crisis in the Middle East could disrupt supplies of critical chipmaking components and gases such as helium. Equipment supply constraints may also cap growth for the $1 trillion chip industry, as the likes of ASML Holding NV cannot add capacity fast enough to satisfy demand for cutting-edge machines from customers including TSMC. What Bloomberg Intelligence Says Extrapolating TSMC's March sales of NT$415.2 billion shows NT$1.13 trillion was achieved in 1Q (35% year-over-year growth), reinforcing our scenario analysis that AI-led demand for 3- and 5-nm chips is likely to keep 2Q sales growth in the high-single digits sequentially. Yet that strength may still not trigger an increase to the capital-spending budget target, as broad macroeconomic uncertainty and soft non-AI semiconductor demand are likely to persuade management to remain cautious. - Charles Shum, analyst Click hereBloomberg Terminal for research TSMC, which makes the vast majority of the world's most advanced semiconductors, is a primary beneficiary of a global race to build AI infrastructure given it's a central partner to Nvidia, Advanced Micro Devices Inc. and Broadcom Inc. Its shares have gained about 30% this year, outperforming its major customers. Read: TSMC Rides Retail Frenzy to New Stock Highs as AI Boom Returns It's also grappling with concerns that a persistent crunch of memory chips -- a component that TSMC does not make -- will shrink the global smartphone market for the first time since 2023. The Taiwanese chipmaker said at the beginning of 2026 that it supplies mostly high-end smartphones, which still saw strong demand and remain less sensitive to a price hike in storage components. As chips become a strategic asset for countries and companies pursuing AI, TSMC also faces new challengers trying to enter the white-hot field. Elon Musk is moving ahead with his ambitious Terafab project to make chips for the billionaire's ventures including Tesla Inc., SpaceX and xAI, while Tokyo is backing Rapidus Corp. in the hope that the startup can start to produce cutting-edge chips in 2027. Read: Musk Asks Suppliers to Move at 'Light Speed' on Terafab Project

Taiwan's chipmaker TSMC reports 58% jump in profit, warns about Iran war impacts

HONG KONG (AP) -- Taiwan's chipmaker TSMC, one of the world's largest companies, reported a 58% jump in profit on Thursday for the January-March quarter, thanks to strong demand driven by the artificial intelligence boom even as the Iran war was driving up costs. Taiwan Semiconductor Manufacturing Corp., a key supplier for Apple and Nvidia and the largest contract chipmaker in the world, reported a record net quarterly profit of 572.5 billion new Taiwan dollars ($18.1 billion) for the first three months of the year, better than analysts had expected. Profit for the quarter was 58.3% higher compared to the 361.6 billion new Taiwan dollars ($11.5 billion) booked the same period a year earlier. It was also 13.2% higher compared with the previous quarter in October-December. Revenue increased 8.4% in the January-March period from the previous three months to $35.9 billion, the company said. For the current April-June quarter, TSMC expected revenue to further grow to between $39 billion and $40.2 billion. As AI-related demand continues to surge, TSMC has been expanding chip fabrication plants in the U.S., Japan and Taiwan, with a focus on making more advanced 3-nanometer semiconductors that are used in smartphones and AI products. "AI-related demand continues to be extremely robust," C.C. Wei, TSMC's CEO and chairman, told an earnings conference on Thursday. "Our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental." TSMC also warned of potential impacts from the Iran war, which has not only pushed up global supply chain costs but is also disrupting the world's supply of chemicals and gas such as helium essential for chipmaking. Wendell Huang, TSMC's chief financial officer, said while rising costs stemming from the Iran war could weigh on profitability, the company has "prepared safety stock inventory on hand" including for helium and is not expecting "any near-term impact" on operations. TSMC has pledged huge investments in expanding its manufacturing capacity in Taiwan and abroad, including $165 billion of commitments in building plants in Arizona. The company said Thursday its capital spending for the next three years will be "significantly higher" than the past three years as it ramps up capacity to meet customers' growing demand. The chipmaker had earlier announced plans to raise its capital expenditure budget to $52 billion-$56 billion for this year from about $40 billion in 2025. It said Thursday it now expects capital spending in 2026 to be toward the higher end of that.

AI demand drives chipmaker TSMC's net profit to fresh record

Taipei (AFP) - Taiwanese chip maker TSMC said Thursday its net profit surged to a fresh record in the first quarter, fuelled by the global artificial intelligence race despite the war in the Middle East. Massive demand for AI hardware means business is booming for TSMC -- the biggest contract maker of microchips used in everything from Apple phones to Nvidia processors. Chief financial officer Wendell Huang said the company did not expect the war to impact its supply of key chipmaking materials such as helium and hydrogen in the near term. "We source from multiple suppliers in different regions, and we have prepared safety stock inventory on hand," Huang told an earnings call, adding that energy supplies were also sufficient to continue operations as normal for now. TSMC said net profit for the first three months of the year jumped 58.3 percent year-on-year to NT$572.5 billion ($18 billion), trouncing analyst estimates of NT$540.20 billion. Governments and tech giants are pouring huge sums into building data centres that can train and run AI tools such as chatbots, image generators and agents that can execute tasks. "The recent situation in the Middle East... brings further macroeconomic uncertainties, as such we are being prudent in our business planning," TSMC chairman CC Wei said. "Having said that, AI-related demand continues to be extremely robust," he added. "We maintain strong confidence for our full-year 2026 revenue to now grow by above 30 percent in US dollar terms." Tight helium supply Last month, Jensen Huang, head of top US chip designer Nvidia, said everyone in the tech world felt they could develop their AI and grow revenue "if they could just get more capacity". Ahead of Thursday's earnings announcement, Ian Lyall at Proactive Investors said it appeared TSMC is "so deeply embedded in the AI supply chain that macro headwinds are struggling to leave a mark". "The bleeding-edge manufacturing that only TSMC can reliably deliver at scale is running at capacity," he noted. A weaker Taiwanese dollar had also boosted the firm's revenues from overseas sales. On Thursday, it said quarterly net revenue rose 35.1 percent year-on-year to NT$1.13 trillion. A note from UBS analysts had predicted strong quarterly results for TSMC but warned that consumer demand was weakening as a result of higher prices caused by a global memory chip shortage that is a side-effect of the AI boom. "Cloud AI demand continues to strengthen, but we think supply constraints will limit meaningful upside for TSMC this year," the UBS team said. "Middle East tensions add a layer of macro uncertainty, but AI spend should stay insulated, barring a protracted conflict." The UBS analysts predicted "limited disruption from tight helium supply on TSMC's production". Helium gas is a key material in the chip supply chain, and Qatar -- one of the countries affected by the war in the Middle East -- is one of its few large-scale producers.

AI boom drives TSMC profit up 58%

The Taiwan-based chipmaker reported record revenue and profit, driven largely by strong demand for artificial intelligence chips and orders from major customers including Apple and Nvidia. The world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), reported a fourth consecutive quarter of record profits on Thursday, as demand for artificial intelligence chips drove a sharp rise in revenue and net income. "AI-related demand continues to be extremely robust," said chairman and chief executive Dr C.C. Wei during a post-earnings conference call. First-quarter net profit rose 58.3% from a year earlier to NT$572.48bn (€15.38bn, $18.11bn), equivalent to earnings of $3.49 per share, beating analysts' expectations. A survey of seven analysts by Zacks Investment Research had forecast earnings of $3.31 per share. Revenue increased 35.1% to NT$1.13tn (€30.5bn), also exceeding market forecasts. Gross margin for the quarter stood at 66.2%, with operating margin at 58.1% and net profit margin at 50.5%. Nearly three-quarters of wafer revenue came from advanced chip technologies, defined as 7-nanometre and below. "Our business in the first quarter was supported by strong demand for our leading-edge process technologies," said Wendell Huang, senior vice-president and chief financial officer. "Moving into the second quarter of 2026, we expect continued strong demand to support our business." TSMC raised its guidance for the year; it expects second-quarter revenue to rise further to between $39bn and $40.2bn, from $35.9bn in the first quarter. Commenting on future revenues, Ben Barringer, head of technology research at Quilter Cheviot, said, "The company did note that the high memory price is likely to be demand destructive for consumer electronics and that this may ultimately be a headwind in time, but the demand from AI likely offsets those concerns". TSMC also warned that geopolitical tensions could affect input costs. "Given the recent situation in the Middle East, prices for certain chemicals and gases are likely to increase," Dr Wei said. "Based on our current assessment, there may be an impact on profitability, but it is too early to quantify." However, TSMC said it does not expect any immediate disruption to operations. It sources key materials, including helium and hydrogen, from multiple suppliers across different regions and maintains safety stock inventories. The company added that it is continuing to diversify its supplier base and strengthen the resilience of its supply chain. "While not completely shielded from increased energy costs, the company has done a good job of working with its supply chain to help mitigate these and keep margins strong," Barringer said.

TSMC can't keep up with AI chip demand, with shortages projected to last beyond 2027

TL;DR: TSMC plans a $56 billion CapEx in 2026 to expand fabrication plants, increase 3nm capacity, and build packaging infrastructure, addressing AI-driven chip demand. Despite this, shortages may persist until 2027 due to long lead times and packaging constraints, opening opportunities for competitors like Samsung and Intel. TSMC's CapEx (Capital Expenditures) for 2026 is projected to hit $56 billion. This capital is being funneled into a three-pronged effort to address rising chip demand: new fabrication plants, increased capacity, and a massive build-out of supporting infrastructure. However, despite this record-breaking spending, TSMC CEO C.C. Wei admits that shortages will likely persist until 2027 and potentially beyond. The primary driver of this insatiable demand is, as you guessed, AI hardware, including GPUs (Nvidia/AMD), CPUs, and HBM (High Bandwidth Memory). This demand from NVIDIA, AMD, Intel, and even automotive giants is drying up capacity for TSMC's mature 3nm process node family, which, despite already reaching production targets, is still not enough. The next issue pertains to packaging constraints. Modern AI processors aren't monolithic chips. Instead, they use technologies such as CoWoS (Chip-on-Wafer-on-Substrate) to integrate logic with HBM (High Bandwidth Memory). As it stands, TSMC's advanced packaging capacity is significantly tighter than its front-end wafer fabrication capacity. Another constraint is lead times, as each new fab needs years to reach high-volume production. It will take two to three years to build a new plant. There are no shortcuts. It will take another year or two to expand production - C.C. Wei, TSMC CEO TSMC's solution to this problem includes three new fabrication plants: a new facility in Tainan, Taiwan, slated for volume production in the first half of 2027, followed by a second fab in Arizona, USA, reaching volume production in the second half of 2027, and finally a 3nm plant in Kumamoto, Japan, by 2028. Likewise, TSMC plans to convert existing 5nm production lines into 3nm capacity. This allows them to quickly and cheaply pivot manufacturing since the building and much of the machinery are already paid for. In terms of infrastructure, a large chunk of this CapEx will go toward the aforementioned backend facilities, including the construction of dedicated packaging plants to increase monthly wafer output. Until now, we have never added that capacity when the node's production capacity reaches its target. But it is currently working on a plan to expand its production capacity globally to meet the powerful multi-year demand pipeline for 3nm technology Semiconductor manufacturing is not about building physical plants but about establishing a complex, reliable pipeline that can take years to fully mature and stabilize. For consumers, the result is simple: as long as demand outpaces supply at TSMC, the cost of cutting-edge 2nm and 3nm chips, and the devices powered by them, will continue to climb. This creates an opening for competitors like Samsung Foundry, which has already secured high-profile contracts with Tesla to diversify its supply chain and challenge TSMC's dominance. Intel Foundry (IFS) is also gaining traction, as its upcoming 14A test chips are currently being evaluated by major industry players. As TSMC remains booked, these competitors may be the only viable option for companies unable to wait until 2027 for new silicon.

TSMC expects its 2026 sales to grow more than 30%

Taiwan Semiconductor Manufacturing Co. expects significant growth in 2026. Strong demand for artificial intelligence applications will drive sales up by more than 30 percent. The company is investing heavily in advanced chip manufacturing. This strategic move aims to solidify its leading position in the global market. TSMC's outlook reflects confidence in the burgeoning AI sector. Taiwan Semiconductor Manufacturing Co. (TSMC) has forecast that its 2026 sales will grow by more than 30 per cent in US dollar terms from a year earlier, on the back of strong global demand for artificial intelligence (AI) applications, according to Focus Taiwan CAN English News. Speaking at an investor conference, TSMC Chairman CC Wei said the current AI boom continues to push up demand for computing, which is expected to boost shipments of chips made using the chipmaker's advanced processes. Wei said the world's largest contract chipmaker remains confident about AI development and its sales outlook, expecting revenue in 2026 to grow by more than 30 per cent, an upgrade from its initial estimate in January, when TSMC forecast sales growth of closer to 30 per cent. Before the investor conference, TSMC reported a record USD 18.16 billion in first-quarter revenue, up 13.2 per cent from a quarter earlier, with earnings per share of USD 0.70. Its consolidated sales also reached a record approximately USD 35.82 billion, up 8.4 per cent from the previous quarter. TSMC is paying close attention to a recent price spike in electronic components and uncertainties created by military conflict in the Middle East, Wei said. As such, it will take a prudent approach in business planning and seek to cement the company's lead over its peers in the global market, Wei added. Also at the investor conference, TSMC Chief Financial Officer Wendell Huang said the company expects second-quarter sales to range between USD 39.0 billion and USD 40.2 billion, with the midpoint expected to rise 10 per cent from a quarter earlier and 32 per cent from a year earlier. TSMC's gross margin, the difference between revenue and cost of goods sold, is forecast to reach 65.5-67.5 per cent, with the median figure expected to rise 0.3 percentage points from the first quarter, according to Huang. In the longer term, TSMC will continue efforts to maintain its gross margin above 56 per cent, Huang added. In response to strong demand for 5G, AI and high-performance computing (HPC) applications from clients, Huang said the company estimates capital expenditure for 2026 will be at the higher end of the USD 52 billion-USD 56 billion range it forecast in January. The capex aims to help TSMC grow in the future and stably boost its EPS to benefit its shareholders, Huang added. The company's capex totalled USD 101.0 billion over the previous three years and the 2026 figure will be more than half that total, indicating the company is upbeat about AI growth, he said. Over the next three years, TSMC's capex is expected to beat that of the previous three-year period, Huang added. According to TSMC, its first quarter capex totalled USD 11.1 billion, down 3.5 per cent from the previous quarter but up 10.3 per cent from a year earlier.

TSMC Is Pouring $56 Billion Into New Fabs, Yet CEO Wei Admits Shortages Will Drag Into 2027 and Beyond

The massive AI cycle has prompted semiconductor giants such as TSMC to invest billions into infrastructure, but even that won't be enough to keep up with demand. Earlier this week, TSMC announced in its earnings call that the company's capital expenditures are expected to reach $56 billion in 2026. That's lots of money, and all of this is being poured into the construction of new chipmaking facilities, while upgrading existing lines to sustain more production. Despite all of this money being spent, TSMC says that it won't be able to keep up with the gigantic AI demand that has currently gripped every sector of the tech industry. From main components such as GPUs, CPUs, and Memory, to other vital electrical equipment such as voltage regulators, ICs, cabling, and materials required to build these solutions, all of it is currently in short supply. As big players such as NVIDIA, AMD, Apple, and the rest continue to renew their wafer orders, TSMC is very much anticipating shortages through 2027, not just 2026. TSMC is currently planning to invest in a range of facilities across the globe. The regions include Japan, Taiwan, United States, where 3nm chip manufacturing plants are set to be constructed. The Taiwan plant is expected to become operational by the first half of 2027, while the US plant will be ready by the second half of 2027. Meanwhile, the one plant in Japan is set to begin manufacturing by 2028. In addition to all the new fabs, we continue to convert 5-nanometer tools to support 3-nanometer capacity in Taiwan. We are also leveraging our manufacturing excellence to drive greater productivity across our fab in all locations to generate more wafer output. We are also focusing on capacity optimization across nodes, which includes flexible capacity support among the N7, N5 and N3 nodes. Thus, we are using multiple levers to do everything we can, wherever we can, however we can to maximize the support to all our customers across all platforms. Also, let me emphasize that while the capacity is tight, we do not pick-and-choose or play favorites among our customers. C.C. Wei - TSMC President & CEO TSMC CEO, C.C. Wei, said that while they haven't added additional capacity to their existing plants, once a node reaches its peak production capacity, that is about to change, as existing plants will be upgraded to supplement the growing capacity needs. Since TSMC is being hammered due to supply constraints, vendors have started to diversify their chip-making plans. Based on our assessment, to meet the strong demand in AI applications, we are stepping up our CapEx investment to increase our N3 capacity. Thus, we are now executing a global capacity plan to support the robust multiyear pipeline of demand for 3-nanometer technologies, which are used by smartphone, HPC/AI, including HBM base dies, automotive and IoT customers. In Taiwan, we are adding a new 3-nanometer fab to our GIGAFAB cluster in Tainan Science Park. Volume production is scheduled for the first half of 2027. In Arizona, our second fab will also utilize 3-nanometer technologies. Construction is already complete and volume production will begin in the second half of 2027. In Japan, we now plan to utilize 3-nanometer technology in our second fab and volume production is scheduled in 2028. C.C. Wei - TSMC President & CEO Tesla is working with both TSMC and Samsung for its next-gen AI chips while also gearing up its own Terafab partnership with Intel. Intel is also rumored to win some major customers by the end of this year with its 14A process technology. Samsung has also seen a big uptick in customers lining up to use its foundries, but its core focus currently remains at DRAM production, such as HBM and LPDDR, which are seeing huge interest due to the rise of Agentic AI. It will be interesting to see how TSMC traverses through the AI super cycle, as every major tech company is currently bombarded with its own supply issues. TSMC, being the biggest semiconductor maker in the world, has a lot riding on its shoulders, and the extra money they are investing in new facilities should offer some relief.

AI demand drives chipmaker TSMC's net profit to fresh record

Governments and tech giants are pouring hundreds of billions of dollars into building new data centres that can run and train AI tools such as chatbots, image generators and agents that can execute tasks. TSMC said its net profit for the first quarter of 2026 rose a whopping 58.3% from a year ago to NT$572.5 billion ($18 billion). Taiwanese chip manufacturer TSMC said Thursday that net profit for January-March leaped to a fresh quarterly record, boosted by the race to develop artificial intelligence technology. Massive global demand for AI hardware means business is booming for TSMC, the world's biggest contract maker of microchips used in everything from Apple phones to Nvidia's AI processors. TSMC said its net profit for the first quarter of 2026 rose a whopping 58.3% from a year ago to NT$572.5 billion ($18 billion). The figure trounced estimates of NT$540.20 billion in a Bloomberg survey of analysts. Governments and tech giants are pouring hundreds of billions of dollars into building new data centres that can run and train AI tools such as chatbots, image generators and agents that can execute tasks. Last month, Jensen Huang, head of top US chip designer Nvidia, said the entire tech world feels they could develop their AI and grow revenue "if they could just get more capacity". Ahead of the earnings announcement, Ian Lyall at Proactive Investors said it appeared TSMC is "so deeply embedded in the AI supply chain that macro headwinds are struggling to leave a mark". "Advanced-node chip production, the bleeding-edge manufacturing that only TSMC can reliably deliver at scale, is running at capacity," he noted. TSMC is "supplying chips for artificial intelligence accelerators, next-generation smartphones, and the data centre build-out that is consuming capital at a pace that has surprised even its most bullish observers", Lyall said. A weaker Taiwanese dollar had also boosted TSMC's revenues from overseas sales. On Thursday, TSMC said net revenue for the first quarter came in at NT$1.13 trillion, up 35.1% year-on-year. A note from UBS analysts had predicted strong quarterly results for TSMC but warned that consumer demand was weakening as a result of higher prices caused by a global memory chip shortage fuelled by the AI boom. "Cloud AI demand continues to strengthen, but we think supply constraints will limit meaningful upside for TSMC this year," the UBS team said. "Middle East tensions add a layer of macro uncertainty, but AI spend should stay insulated, barring a protracted conflict." The UBS analysts predicted "limited disruption from tight helium supply on TSMC's production". Helium gas is a key material in the chip supply chain, and Qatar -- one of the countries affected by the war in the Middle East -- is one of its few large-scale producers. TSMC said Thursday it does not expect the war to impact its supply of chipmaking materials such as helium and hydrogen in the near term.

Taiwan's chipmaker TSMC reports 58% jump in profit, warns about Iran war impacts

HONG KONG -- Taiwan's chipmaker TSMC, one of the world's largest companies, reported a 58 per cent jump in profit on Thursday for the January-March quarter, thanks to strong demand driven by the artificial intelligence boom even as the Iran war was driving up costs. Taiwan Semiconductor Manufacturing Corp., a key supplier for Apple and Nvidia and the largest contract chipmaker in the world, reported a record net quarterly profit of 572.5 billion new Taiwan dollars ($18.1 billion) for the first three months of the year, better than analysts had expected. Profit for the quarter was 58.3% higher compared to the 361.6 billion new Taiwan dollars ($11.5 billion) booked the same period a year earlier. It was also 13.2% higher compared with the previous quarter in October-December. Revenue increased 8.4% in the January-March period from the previous three months to $35.9 billion, the company said. For the current April-June quarter, TSMC expected revenue to further grow to between $39 billion and $40.2 billion. As AI-related demand continues to surge, TSMC has been expanding chip fabrication plants in the U.S., Japan and Taiwan, with a focus on making more advanced 3-nanometer semiconductors that are used in smartphones and AI products. "AI-related demand continues to be extremely robust," C.C. Wei, TSMC's CEO and chairman, told an earnings conference on Thursday. "Our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental." TSMC also warned of potential impacts from the Iran war, which has not only pushed up global supply chain costs but is also disrupting the world's supply of chemicals and gas such as helium essential for chipmaking. Wendell Huang, TSMC's chief financial officer, said while rising costs stemming from the Iran war could weigh on profitability, the company has "prepared safety stock inventory on hand" including for helium and is not expecting "any near-term impact" on operations. TSMC has pledged huge investments in expanding its manufacturing capacity in Taiwan and abroad, including $165 billion of commitments in building plants in Arizona. The company said Thursday its capital spending for the next three years will be "significantly higher" than the past three years as it ramps up capacity to meet customers' growing demand. The chipmaker had earlier announced plans to raise its capital expenditure budget to $52 billion-$56 billion for this year from about $40 billion in 2025. It said Thursday it now expects capital spending in 2026 to be toward the higher end of that.

TSMC lifts revenue forecast, pledges spending to meet AI chip demand

STORY: TSMC raised its annual revenue forecast on Thursday (April 16). The tech giant further said it's stepping up capital spending this year. That as the world's biggest contract manufacturer of advanced AI chips tries to meet massive demand for its products. The bullish outlook comes after the company - which is a major Nvidia supplier - said first-quarter profit leapt 58% to a record $18.2 billion. That was well ahead of expectations and marked its eighth straight quarter of double-digit growth. CEO C.C. Wei said TSMC was being prudent in planning due to uncertainty caused by the Middle East conflict. He also said AI-related demand was still "extremely robust". His remarks were likely to ease investor worries about the impact of the war. He added full-year revenue in U.S. dollar terms would grow more than 30% - that's up from a previous forecast of close to 30%. While capital expenditure would be at the high end of its earlier guidance of $52 billion to $56 billion. Looking ahead, TSMC forecast sales between $39 billion and just over $40 billion for the current quarter. That's well up from the same period last year and a jump from close to $36 billion in the first quarter. The huge demand for high-performance chips needed for AI has driven Asia's most valuable company to new heights. TSMC's shares have gained more than a third so far this year.

TSMC set to post 50% quarterly profit jump, extend record earnings on insatiable AI demand

TAIPEI, April 16 (Reuters) - TSMC, the world's largest manufacturer of advanced artificial intelligence chips, will likely notch up a fourth consecutive quarter of record earnings with a 50% surge in net profit for January-March driven by booming demand for AI infrastructure. Demand for Taiwan Semiconductor Manufacturing Co's 3-nanometre technology to produce AI chips and its advanced packaging technology continues to outstrip the firm's current production capacity, according to analysts. That's driven Asia's most valuable company, a key supplier to Nvidia and Apple, to new heights. Its market capitalisation is now nearly double that of South Korean rival Samsung Electronics at around $1.68 trillion. On Thursday, TSMC is expected to report a net profit of T$543.3 billion ($17.23 billion) for the first quarter, according to an LSEG SmartEstimate compiled from 19 analysts. SmartEstimates place greater weight on forecasts from analysts who are more consistently accurate. An earnings call at which it will provide second-quarter and updated full-year guidance is scheduled for 0600 GMT. A profit above T$505.7 billion would mark the company's highest-ever quarterly net income and its ninth consecutive quarter of profit growth. Last week, it posted a 35% year-on-year rise in first-quarter revenue, ahead of market forecasts. The war in the Middle East threatens to disrupt the supply of production materials for semiconductors such as helium and neon, but TSMC is seen by analysts as well-placed to weather the crisis. One area of focus will be whether TSMC maintains or raises its 2026 capital spending plans as that will reflect management's confidence in long-term AI demand, analysts said. At its last earnings call in January, the company said capital spending this year would hit between $52 billion and $56 billion, up as much as 37% compared with 2025's $40.9 billion. TSMC is investing $165 billion to build chip factories in the U.S. state of Arizona. The company has also revised its plans in Japan and is now set to manufacture 3-nanometre chips there, instead of focusing on more mature nodes. TSMC's Taipei-listed shares have gained 34% so far this year, outperforming the 27% rise for the broader market. (Reporting by Wen-Yee Lee and Ben Blanchard; Editing by Muralikumar Anantharaman)