TSMC earnings jump 58% on booming AI chip demand

Taiwan Semiconductor Manufacturing Company reported strong first-quarter earnings on Thursday, as steady demand for artificial intelligence chips pushed both revenue and profit to record levels.

The world’s largest contract chipmaker posted net income of $18.2 billion for the three months ended March, up 58% from a year earlier and ahead of expectations. The result extended its streak of record profits to a fourth consecutive quarter. It also marked its eighth straight period of double-digit growth.

According to LSEG SmartEstimates, which weigh forecasts from consistently accurate analysts, Taiwan Semiconductor Manufacturing Company beat expectations on both revenue and profit.

The company reported revenue of about $35 billion, ahead of the expected $34.8 billion, while net income came in at around $18.2 billion, surpassing estimates of roughly $17.3 billion. On a yearly basis, revenue rose 35% to about $35 billion, in line with the preliminary figure disclosed earlier.

As Asia’s largest listed technology firm, TSMC manufactures chips used across a wide range of industries, from consumer electronics to hyperscale data centers. It has seen strong demand from major clients such as Apple and Nvidia, with the latter now its largest customer due to rising demand for AI processors.

Chief Executive C.C. Wei said “AI-related demand continues to be extremely robust,” adding that rapid advances in artificial intelligence are driving more computing needs and, in turn, higher semiconductor demand. He also pointed to strong customer signals that support expectations for a multi-year growth cycle tied to AI.

TSMC now expects full-year 2026 revenue to grow by more than 30% in U.S. dollar terms, slightly above its earlier outlook. For the second quarter, it forecast revenue between $39 billion and $40.2 billion, implying about 10% sequential growth.

The upbeat guidance comes despite concerns over supply chain risks linked to the Middle East conflict, which could affect energy supplies and key materials such as helium and hydrogen. Executives said they do not expect any near-term disruption, noting the company maintains safety inventories and sources critical inputs from multiple suppliers.

Advanced chips lead revenue mix

High-performance computing, which includes AI and 5G applications, remained the main driver of sales, accounting for 61% of total revenue in the first quarter.

Advanced chips, defined as 7-nanometer or below, made up around 74% of wafer revenue. Within that, 3-nanometer chips contributed 25%, highlighting a rapid shift toward more advanced nodes. Smaller process nodes allow for more compact transistor designs, improving both performance and energy efficiency.

To keep up with demand, TSMC is expanding its manufacturing footprint. The company confirmed plans to add a new advanced fabrication plant in Tainan, Taiwan, while also scaling 3-nanometer capacity across Taiwan, the United States, and Japan. Its U.S. expansion forms part of a broader $165 billion investment in Arizona.

William Li, senior analyst at Counterpoint Research, said demand for AI chips has effectively pushed TSMC’s production capacity to its limits.

“Demand still significantly outpaces supply and isn’t showing any major sign of slowing down,” Li said, adding that tight capacity conditions are likely to persist through 2026.

External analysts echoed similar views, noting that TSMC’s facilities are operating at high utilisation levels as AI workloads continue to drive orders.

The company reiterated that capital expenditure for 2026 will be at the upper end of its previously guided $52 billion to $56 billion range, as it accelerates expansion to meet sustained demand.