TAIPEI, Taiwan: A surge in demand for artificial intelligence chips has propelled TSMC to a record-breaking quarter, with the company reporting sharply higher profits, forecasting strong growth, and signaling plans to expand manufacturing in the United States further.

The world's leading producer of advanced AI chips said on January 15 that fourth-quarter profit jumped 35 percent to a record high, beating market expectations. The company also forecast robust revenue growth for 2026 and said additional U.S. production capacity was being planned.

Riding what it described as the "AI mega trend," TSMC said its customers — and their customers — were "providing strong signals" and requesting more capacity. It forecast that revenue in 2026 would rise by nearly 30 percent in U.S. dollar terms.

The Taiwanese chipmaker, whose major customers include Nvidia and Apple, announced last year that it plans to invest US$100 billion in the United States, in addition to $65 billion already pledged for three factories in Arizona. One of those plants is already operating.

The artificial intelligence boom has allowed TSMC, Asia's most valuable listed company, to pull further ahead of rivals. It now has a market capitalization of around $1.4 trillion, more than double that of Samsung Electronics.

U.S. Plans

TSMC is accelerating capacity expansion both at home in Taiwan and in Arizona. Chief Executive C.C. Wei said the company is applying for permits to begin construction of a fourth factory in Arizona, along with its first advanced packaging plant. He added that additional land has already been purchased there.

"That gives you a hint as to what we plan to do, because we need it. We are going to expand many fabs over there, and this gigafab cluster can help us to improve the productivity, to lower the cost, and to serve our customers in the U.S. better."

U.S. Commerce Secretary Howard Lutnick said in a podcast released last week that TSMC was set to invest more in the country. The New York Times has reported that the Trump administration is close to a trade deal with Taiwan to cut its tariff rate to 15 percent from 20 percent and wants TSMC to commit to building at least five additional facilities in Arizona.

Taiwan also signaled on January 15 that a tariff deal with the United States could be reached soon.

Strong Profit

TSMC said its capital spending could rise as much as 37 percent this year to $56 billion and will increase "significantly" in 2028 and 2029 as AI demand continues to grow.

Asked about concerns over a potential AI bubble, Wei said the company remained cautious.

"We're also very nervous about it. We're investing between $52 billion and $56 billion in capex. If we did not do it carefully, that would be a disaster for TSMC for sure."

Net profit for the final three months of 2025 rose to T$505.7 billion ($16 billion), marking a seventh straight quarter of double-digit growth and beating a T$478.4 billion LSEG SmartEstimate. TSMC said first-quarter revenue could climb as much as 40 percent from a year earlier to $35.8 billion.

Ben Barringer, head of technology research at Quilter Cheviot, said the results marked a strong start to earnings season for major technology firms.

"While the likes of Nvidia, Broadcom, and AMD fight it out for chip supremacy, TSMC ultimately benefits as the key manufacturer of all their chips," he said.

TSMC's Taipei-listed shares rose 44 percent last year, outperforming a 25.7 percent gain in the broader market, and are up about nine percent so far this year.