TSMC Caps Record Year with Robust Growth and Aggressive 2026 Spending Plan

Taiwan Semiconductor Manufacturing Company (TSMC) has set a formidable new benchmark for the semiconductor industry, concluding a stellar 2025 and projecting even more ambitious targets for the year ahead. The world’s leading contract chipmaker reported exceptional fourth-quarter results, underscored by surging profitability and a monumental capital expenditure plan for 2026, reinforcing its pivotal role in the artificial intelligence revolution. Investor confidence was immediately reflected as the company’s shares reached a new all-time high on the Taipei exchange.

Financial Performance Highlights Record Quarter

The final quarter of 2025 saw TSMC achieve revenues of TWD 1,046.09 billion (approximately USD 33.73 billion), marking a substantial year-over-year increase of 20.5%. Net profit growth was even more pronounced, climbing 35.0% to TWD 505.74 billion. Earnings per share (diluted) came in at TWD 19.50.

Profitability metrics remained exceptionally strong, demonstrating the company’s ability to translate demand for its most advanced manufacturing technologies into robust financial returns. The gross margin stood at an impressive 62.3%, while the operating margin reached 54.0%.

A breakdown of revenue by technology node reveals the accelerating shift toward cutting-edge applications. Advanced processes (7-nanometer and below) collectively contributed 77% of total wafer revenue. Specifically, 3-nanometer technology accounted for 28%, 5-nanometer for 35%, and 7-nanometer for 14%. This product mix underscores TSMC’s dominance in supplying chips for high-performance computing and AI accelerators.

Ambitious 2026 Guidance and Unprecedented Capex

Looking forward, management has provided a bullish outlook for the first quarter of 2026, forecasting revenue between USD 34.6 billion and USD 35.8 billion. This represents a potential year-over-year surge of up to 38%. Furthermore, the gross margin is expected to expand further, projected to land between 63% and 65%.

The most striking element of the forward guidance is the dramatic rise in planned capital investment. TSMC announced a 2026 capital budget ranging from USD 52 billion to USD 56 billion, a significant jump from the USD 40.9 billion spent in 2025. These funds are earmarked for capacity expansion, including the ramp-up of its next-generation 2-nanometer process technology scheduled for production later this year.

Should investors sell immediately? Or is it worth buying TSMC?

This triad of robust growth projections, expanding profitability, and aggressive investment signals management’s conviction that AI-driven demand for advanced semiconductors is not a transient cycle but a sustained, multi-year structural growth driver for the industry.

Cementing Leadership in the AI Supply Chain

The company’s strong financials and expansive spending plans highlight its indispensable position within the global AI ecosystem. The increased investment is a direct response to soaring demand from key clients such as Nvidia and Broadcom, who are navigating supply constraints for AI processors destined for cloud and data center applications.

By committing tens of billions to new capacity and next-generation technology, TSMC is fortifying its technological leadership. This strategic move is also accelerating the company’s own growth trajectory, supported by an upward revision in its long-term revenue compound annual growth rate (CAGR) forecast.

The scale of TSMC’s planned expenditures is also viewed as a positive indicator for the broader semiconductor equipment sector. Suppliers like ASML, Applied Materials, and Lam Research are poised to benefit indirectly from the chipmaker’s massive capacity build-out.

Market Reaction and Industry Implications

Following the earnings release, several market analysts reaffirmed or upgraded their positive assessments of TSMC, citing its commanding position in high-end manufacturing and its pricing power within premium technology nodes. The immediate focus for traders is whether the stock’s momentum can be sustained after its rally to a record peak.

For the semiconductor and AI infrastructure landscape, TSMC has established a clear framework for 2026. The combination of double-digit revenue growth, rising margins, and a sharply elevated capital budget is likely to be a defining force shaping the industry’s direction throughout the coming year.