Taiwan Semiconductor Manufacturing Company reported strong first-quarter profits on Thursday, as continued demand for artificial intelligence chips pushed both revenue and profit to record levels.
Summary
- Taiwan Semiconductor Manufacturing Company posted a 58% jump in Q1 profit to a record NT$572.48 billion, beating estimates as AI chip demand remains strong.
- Revenue rose 35% year over year, with increased demand led by Nvidia and a push for advanced chips to dominate the sales mix.
- TSMC expects revenue growth of more than 30% by 2026 and plans higher capex as capacity remains strong amid continued AI demand.
The world’s largest contract manufacturer posted net income of $18.2 billion in the three months ended March, up 58% from a year ago and ahead of expectations. The result extended the streak of record profits to the fourth quarter in a row. It also marked its eighth consecutive period of double-digit growth.
According to LSEG SmartEstimates, which measures forecasts from conservative analysts, Taiwan Semiconductor Manufacturing Company is beating expectations for both revenue and profit.
The company reported revenue of $35 billion, ahead of $34.8 billion, and revenue came in at $18.2 billion, beating estimates of $17.3 billion. For the year, revenue rose 35% to nearly $35 billion, in line with the first figure previously disclosed.
As the largest listed technology firm in Asia, TSMC produces chips used in a wide variety of industries, from consumer electronics to hyperscale data centers. It has seen strong demand from major customers such as Apple and Nvidia, with the latter now being its largest customer due to the growing demand for AI processors.
CEO CC Wei said that “AI-related demand continues to be very strong,” adding that the rapid development of artificial intelligence is driving more computer needs, as well as, greater demand for semiconductors. He also cited strong customer signals supporting expectations of a multi-year growth cycle tied to AI.
TSMC now expects full-year 2026 revenue to grow more than 30% in US dollar terms, slightly above its previous outlook. For the second quarter, it forecasts revenue between $39 billion and $40.2 billion, which means sequential growth of 10%.
The upbeat guidance comes despite concerns about supply chain risks related to the Middle East conflict, which could affect the supply of energy and essential materials such as helium and hydrogen. Management said they do not expect any imminent disruption, noting that the company maintains a security inventory and receives critical input from multiple suppliers.
Advanced chips lead the 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 nanometers or less, make up about 74% of wafer revenue. Within that, 3 nanometer chips contributed 25%, highlighting the rapid shift to more advanced nodes. Smaller process nodes allow compact transistor designs, which improve both performance and power efficiency.
To keep up with the demand, TSMC is expanding its production facility. The company has confirmed plans to add a new advanced plant in Tainan, Taiwan, while scaling 3-nanometer capacity in Taiwan, the United States and Japan. Its US expansion is part of a broader $165 billion investment in Arizona.
William Li, senior analyst at Counterpoint Research, said the demand for AI chips has effectively pushed TSMC’s production capacity to its limits.
“Demand still far outstrips supply and shows no major signs of abating,” Li said, adding that tight energy conditions are likely to continue until 2026.
Outside analysts echoed similar sentiments, noting that TSMC’s facilities are operating at higher levels of utilization as AI workloads continue to drive orders.
The company reiterated that spending in 2026 will be at the lower end of its previous guidance range of $52 billion to $56 billion, as it accelerates expansion to meet continued demand.
