Taiwan Semiconductor Manufacturing Company reported strong first-quarter results on Thursday, as steady demand for artificial intelligence chips boosted both sales and profits to record levels.
summation
- Taiwan Semiconductor Manufacturing Company beat expectations with first-quarter profit rising 58% to $572.48 billion as demand for AI chips remained strong.
- Sales rose 35% year-over-year, with Nvidia-led demand driving growth and high-end chips dominating the sales mix.
- TSMC expects sales to grow by more than 30% in 2026 and plans to invest more in facilities as production capacity becomes insufficient due to continued demand for AI.
The world’s largest contract chipmaker reported net profit of $18.2 billion in the three months to March, up 58% from a year earlier and ahead of expectations. As a result, we extended our record profit streak to four consecutive quarters. It has also recorded double-digit growth for eight consecutive years.
Taiwan Semiconductor Manufacturing Company beat expectations on both revenue and profit, according to LSEG SmartEstimates, which consistently evaluates accurate analyst forecasts.
The company reported revenue of about $35 billion, ahead of forecasts of $34.8 billion, and net income of about $18.2 billion, ahead of expectations of about $17.3 billion. Full-year revenue rose 35% to about $35 billion, consistent with preliminary figures released earlier.
TSMC, Asia’s largest publicly traded technology company, manufactures chips used in a variety of industries from consumer electronics to large-scale data centers. It has seen strong demand from major customers such as Apple and Nvidia, the latter of which is currently its largest customer due to growing demand for AI processors.
“AI-related demand continues to be very robust,” said CEO CC Wei, adding that the rapid development of artificial intelligence is driving more computing demand and correspondingly increasing demand for semiconductors. He also pointed to strong customer signals that support expectations of a multi-year growth cycle related to AI.
TSMC now expects full-year revenue in 2026 to increase by more than 30% in U.S. dollars, slightly higher than its previous forecast. Sales in the second quarter were expected to be between $39 billion and $40.2 billion, a sequential growth of about 10%.
The optimistic guidance comes despite concerns about supply chain risks related to conflict in the Middle East. This could affect energy supplies and key substances such as helium and hydrogen. Executives said they do not expect any near-term disruption, noting that the company maintains safety stocks and sources critical information from multiple suppliers.
Advanced chips drive revenue mix
High-performance computing, including AI and 5G applications, remained the main revenue driver, accounting for 61% of total revenue in the first quarter.
Advanced chips, defined as 7 nanometers or smaller, accounted for about 74% of wafer sales. Of these, 3-nanometer chips accounted for 25%, highlighting the rapid transition to more advanced nodes. Smaller process nodes allow for more compact transistor designs, improving both performance and energy efficiency.
To keep up with demand, TSMC is expanding its manufacturing footprint. The company confirmed plans to expand its 3-nanometer capacity across Taiwan, the United States, and Japan, while adding a new advanced manufacturing plant in Tainan, Taiwan. The US expansion forms part of a broader $165 billion investment in Arizona.
William Li, senior analyst at Counterpoint Research, said demand for AI chips has effectively pushed TSMC’s production capacity to its limit.
“Demand still significantly outstrips supply and shows no significant signs of slowing down,” Li said, adding that capacity shortages are likely to persist until 2026.
External analysts expressed similar views, noting that TSMC facilities are operating at high utilization levels as AI workloads continue to drive orders.
The company reiterated that capital spending in 2026 will be at the upper end of the previously guided range of $52 billion to $56 billion as it accelerates expansion to meet ongoing demand.