Taiwan Semiconductor Manufacturing Co. (TSMC) reported a record fourth-quarter profit, pointing to strong demand linked to artificial intelligence and saying capacity is currently tight as customers seek more supply.
The company said net profit for October to December rose 35% from a year earlier to NT$505.7 billion (US$16 billion), extending what it described as its seventh straight quarter of double-digit growth.
TSMC also said it is speeding up parts of its U.S. capacity expansion to meet client needs, including plans tied to its second semiconductor plant phase in Arizona.
Record quarter and full-year results
In its quarterly update, TSMC said fourth-quarter consolidated sales reached a record US$33.73 billion, or NT$1.05 trillion, and came in above the company’s prior estimate of US$32.2 billion to US$33.4 billion.
TSMC said fourth-quarter net profit rose 35.0% from a year earlier and 11.8% from the previous quarter, while earnings per share were NT$19.50, compared with NT$11.45 a year earlier and NT$17.44 a quarter earlier.
The company said its fourth-quarter gross margin increased 2.8 percentage points from the prior quarter to 62.3%, citing improved cost controls, a favorable foreign exchange rate, and higher capacity utilization, and said that result exceeded its earlier 59%–61% guidance range.
For 2025, TSMC said it posted a record net profit of NT$1.72 trillion (US$54.43 billion), up 46.4% from a year earlier, alongside earnings per share of NT$66.25 versus NT$45.25 in 2024.
TSMC said 2025 consolidated sales hit a record NT$3.81 trillion, up 31.6% year over year, and that its full-year gross margin rose 3.8 percentage points to 59.9%.
AI demand and advanced chips
TSMC tied its momentum to what it called the “AI mega trend,” and said customers were “providing strong signals” and were reaching out directly to request capacity.
TSMC Chairperson C.C. Wei was quoted as saying, “Our conviction in the multiyear AI mega trend remains strong, and we believe the demand for semiconductors will continue to be very fundamental.”
The company’s most advanced manufacturing nodes continued to make up a large share of sales, with TSMC saying its 3-nanometer process accounted for 28% of fourth-quarter sales, while 5nm represented 35% and 7nm represented 14%.
TSMC said advanced processes overall accounted for 77% of its total revenue in the fourth quarter.
Expansion plans, spending, and capacity constraints
In the U.S., TSMC has announced plans to invest US$100 billion on top of US$65 billion pledged for three plants in Arizona, with one plant already operating, according to the report.
At a news briefing, Wei said TSMC had purchased additional land in Arizona, describing it as a hint of U.S. plans while not providing further details.
Separately, TSMC said it is “speeding up” its U.S. capacity expansion and is pushing up the opening date of its phase 2 semiconductor fab in Arizona.
TSMC said capacity is “very tight” at the moment and that it is working to narrow the gap between supply and demand, while also noting that construction is underway at a second fab in Japan and that it will continue to invest in Taiwan.
On spending, TSMC said capital spending this year could rise as much as 37% to US$56 billion and would increase “significantly” in 2028 and 2029.
A separate report also said TSMC expects capital spending to reach as high as US$56 billion in 2026.
Tariffs and trade deal reports
TSMC’s U.S. expansion has drawn attention amid reports about tariff negotiations, with one report noting foreign media claims that Taiwan negotiated a reduction in the basic U.S. tariff on its goods from 20% to 15% in exchange for expanded TSMC semiconductor capacity in the U.S.
Another report cited the New York Times as saying the Trump administration is nearing a trade deal with Taiwan to reduce the tariff rate to 15% from 20% and wants TSMC to commit to building at least five more facilities in Arizona.
Taiwan also signaled that a tariff deal with the United States could come soon, according to the same report.
A separate report said Taipei had reached a “general consensus” with the U.S. on a trade deal that Taiwan hopes will reduce its current 20% tariff and shield its semiconductor industry from levies.
That report also said U.S. investigations under Section 232 into semiconductors and chipmaking equipment were launched last year, and that President Donald Trump signed an order imposing a 25% tariff on semiconductors that are “transshipped through the U.S. to other foreign countries.”
