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TSMC Q4 profit surges 35% on robust AI chip demand
TSMC has announced a 35% rise in fourth-quarter profits
Taiwan Semiconductor Manufacturing Company (TSMC) has announced a 35% rise in fourth-quarter profits, surpassing expectations and setting a new record as the need for AI chips remained high.
The largest contract chipmaker globally marked profit increases for eight quarters in a row.
In the December quarter, TSMC's revenue climbed 20.5% from the previous year, exceeding NT$1 trillion and surpassing predictions.
As Asia's top technology firm by market value, TSMC has immensely gained from the AI boom, crafting advanced AI processors for clients like Nvidia and AMD.
During the October-December period, the company's high-performance computing segment, which encompasses AI and 5G tech, contributed most to its sales.
TSMC disclosed that advanced chips of 7-nanometers or smaller accounted for 77% of the total wafer income in the quarter.
Throughout 2025, these chips represented 74% of revenue, increasing from 69% in 2024.
"The demand for AI remains very strong, driving overall chip demand across the entire server industry," Counterpoint Research senior analyst Jake Lai told CNBC, predicting that 2026 will be another "breakout year" for AI server demand.
"With TSMC's ongoing 2nm capacity expansion and new production contributing to revenue, along with continuous expansion of advanced packaging... TSMC is expected to maintain strong performance in 2026," Lai said.
However, he cautioned that chip demand linked to consumer gadgets like smartphones and PCs may face challenges due to the ongoing memory shortage and price rises.