Taiwanese chipmaking giant TSMC has posted huge growth, says more is on the way as the AI boom is not abating, but also pointed to the inevitability of price rises for its output.
The company yesterday announced Q4 2025 revenue of $33.7 billion, up 25.5 percent from last year’s Q4. Full year revenue landed at $122.5 billion, up 36 percent compared to the previous year. Execs forecast $34 to $35.8 billion revenue for Q1 2026, and 30 percent revenue growth across FY 2026. Annual net income topped $55 billion.
“Looking ahead, we observe increasing AI model adoption across consumer, enterprise and sovereign AI segments,” Chairman and CEO C.C. Wei told investors. “This is driving need for more and more computation, which supports the robust demand for leading-edge silicon. Our customers continue to provide us with a positive outlook,” he added.
Wei said TSMC’s customers typically engage with it two or three years before production, suggesting they see years more of heavy demand for AI infrastructure.
“In addition, our customers' customers, who are mainly the cloud service providers, are also providing strong signals and reaching out directly to request the capacity to support their business,” the CEO said. “Thus, our conviction in the multiyear AI megatrend remains strong, and we believe the demand for semiconductors will continue to be very fundamental.”
Satisfying that demand will mean TSMC has to spend a lot of cash on new manufacturing capacity.
CFO Jen-Chau Huang reminded investors that TSMC has spent $101 billion on capital expenditure in the last three years and expects “significantly higher” spending in the next three – $52 to $56 billion in 2026 alone. 70 to 80 percent of that spend will go on advanced nodes, which TSMC defines as 7nm and smaller manufacturing processes.
Huang pointed out that each new generation manufacturing process requires higher capital expenditure than its predecessor, so prices for finished products must rise. In the Q&A section of the earnings call, a financial analyst pointed to TSMC hiking wafer prices by 20 percent. Huang said such price rises “will continue … going forward.”
TSMC’s optimistic revenue forecast – and guidance that it can improve gross margins from its current 62.3 percent to 65 percent or better – suggests the company doesn’t fear the impact of price rises. Indeed, C.C. Wei said TSMC’s high-end smartphone customers are less sensitive to memory price rises, meaning demand is still strong.
Director of investor relations Jeff Su said TSMC will stage a “very fast ramp” of its two-nanometer process in 2026, and that it will deliver more revenue, faster than its three-nanometer efforts. Wei said two TSMC plants are already producing 2nm parts “with good yield,” and that volume production of a new “A 16” process suited to “specific HPC products with complex signal route and dense power delivery network” will commence in the second half of 2026. Around 30 percent of 2nm production will take place in the USA.
Wei and other execs described the complex balancing act required to build factories, bring them online, manage capacity, and ensure high utilization rates, all while balancing customer demand and conducting balance sheet acrobatics to keep cash moving through the business. The company assured investors it can manage that challenge, while also continuing to develop better chipmaking tech. ®
Source: The register