TSMC Reports Record Fourth Quarter on AI Chip Demand Surge

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), reported a fourth consecutive quarter of record profits on Thursday, as demand for artificial intelligence chips drove a sharp rise in revenue and net income. “AI-related demand continues to be extremely robust,” said chairman and chief executive Dr C.C. Wei during a post-earnings conference call. First-quarter net profit rose 58.3% from a year earlier to NT$572.48bn (€15.38bn, $18.11bn), equivalent to earnings of $3.49 per share, beating analysts’ expectations. A survey of seven analysts by Zacks Investment Research had forecast earnings of $3.31 per share. Revenue increased 35.1% to NT$1.13tn (€30.5bn), also exceeding market forecasts. Gross margin for the quarter stood at 66.2%, with operating margin at 58.1% and net profit margin at 50.5%. Nearly three-quarters of wafer revenue came from advanced chip technologies, defined as 7-nanometre and below. “Our business in the first quarter was supported by strong demand for our leading-edge process technologies,” said Wendell Huang, senior vice-president and chief financial officer. “Moving into the second quarter of 2026, we expect continued strong demand to support our business.” TSMC raised its guidance for the year; it expects second-quarter revenue to rise further to between $39bn and $40.2bn, from $35.9bn in the first quarter. Commenting on future revenues, Ben Barringer, head of technology research at Quilter Cheviot, said, "The company did note that the high memory price is likely to be demand destructive for consumer electronics and that this may ultimately be a headwind in time, but the demand from AI likely offsets those concerns". TSMC also warned that geopolitical tensions could affect input costs. “Given the recent situation in the Middle East, prices for certain chemicals and gases are likely to increase,” Dr Wei said. “Based on our current assessment, there may be an impact on profitability, but it is too early to quantify.” However, TSMC said it does not expect any immediate disruption to operations. It sources key materials, including helium and hydrogen, from multiple suppliers across different regions and maintains safety stock inventories. The company added that it is continuing to diversify its supplier base and strengthen the resilience of its supply chain. “While not completely shielded from increased energy costs, the company has done a good job of working with its supply chain to help mitigate these and keep margins strong,” Barringer said.