TSMC posts record profits on continued AI demand

Taiwan Semiconductor Manufacturing Company on Thursday reported a 58% increase in first-quarter profit, beating estimates and hitting a fresh record as demand for artificial intelligence chips stayed strong.

Here are the company’s results versus LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 1.134 trillion new Taiwan dollars ($35 billion), vs. NT$1.127 trillion expected
• Net income: NT$572.48 billion, vs. NT$543.32 billion 

TSMC’s net income of NT$572.48 billion for the three months ended in March represented a fourth consecutive quarter of record profits. 

Revenue rose to NT$1.134 trillion, beating estimates. The chipmaker had first reported the 35% year-on-year rise in first-quarter revenue last week.

TSMC, Asia’s largest technology company by market capitalization, manufactures chips used in products ranging from consumer electronics to data centers.

The contract chip maker has maintained strong demand for advanced semiconductors from its key customers, such as Apple. It has also benefited greatly from the proliferation of AI, producing advanced processors designed by the likes of Nvidia — now the company’s largest customer. 

“AI-related demand continues to be extremely robust,” President and CEO of TSMC C.C. Wei said in an earnings call Thursday. He added that advances in AI are driving increased computation and, thus, demand.

Wei noted that TSMC has received strong signals and a positive outlook from customers, reinforcing its conviction in a multi-year AI growth trend.

TSMC forecast full-year 2026 revenue growth of more than 30% year over year in U.S. dollar terms. Meanwhile, it projected second-quarter revenue of $39 billion to $40.2 billion, representing a 10% sequential increase.

This comes as the company faces concerns about supply chain disruptions linked to the Middle East conflict, including disruptions to energy supplies and key manufacturing materials such as helium and hydrogen.

In the earnings call, TSMC executives said the chipmaker does not expect any near-term impact on its operations from recent energy and supply chain disruptions from the conflict in the Middle East.

The company added that it sources specialty chemicals and gases, including helium and hydrogen, from multiple sources and has a safety inventory.

TSMC’s high-performance computing division, which includes AI and 5G applications, accounted for the majority of sales in the first quarter, rising to 61% of revenue.

Meanwhile, the company said advanced chips, defined as 7-nanometer or smaller, made up about 74% of TSMC’s total wafer revenue in the quarter. Shipments of advanced chips under 3-nanometers accounted for 25%.

In semiconductor technology, smaller nanometer sizes signify more compact transistor designs, which lead to greater processing power and efficiency.

During the Thursday earnings call, executives said the company was adding an advanced chip fabrication plant in Tainan, Taiwan, as part of its global capacity expansion efforts.

William Li, senior analyst at Counterpoint Research, told CNBC that AI chip demand has pushed TSMC’s manufacturing capacity to its limits.

“The narrative for 2026 is as much about resource constraints as it is about growth. Demand still significantly outpaces supply and isn’t showing any major sign of slowing down,” Li said.

“We expect this sold-out environment to remain a defining characteristic of the semiconductor industry throughout 2026, as semiconductor companies simply can’t keep products on their shelves,” he added.

At its last earnings call in ​January, the company said it expected capital spending this year to rise as much as 37% to between $52 billion and $56 billion, reflecting its expansion efforts and an expectation that demand will remain strong. The company said Thursday it now expects capex to be at the high end of that range.