Taiwanese chip giant TSMC reported on Thursday a surge in net profits, which reached a fresh record in the first quarter, fuelled by the strong artificial intelligence demand despite the war in the Middle East.
Massive demand for AI hardware means business is booming for TSMC – the biggest contract maker of microchips used in everything from Apple phones to Nvidia processors.
Chief financial officer Wendell Huang said the company did not expect the war to impact its supply of key chipmaking materials such as helium and hydrogen in the near term.
"We source from multiple suppliers in different regions, and we have prepared safety stock inventory on hand," Huang told an earnings call, adding that energy supplies were also sufficient to continue operations as normal for now.
TSMC said net profit for the first three months of the year jumped 58.3% year-on-year to NT$572.5 billion ($18 billion), surpassing analyst estimates of NT$540.20 billion.
Governments and tech giants are pouring huge sums into building data centers that can train and run AI tools such as chatbots, image generators and agents that can execute tasks.
"The recent situation in the Middle East ... brings further macroeconomic uncertainties; as such, we are being prudent in our business planning," TSMC Chairperson CC Wei said.
"Having said that, AI-related demand continues to be extremely robust," he added.
"We maintain strong confidence for our full-year 2026 revenue to now grow by above 30% in U.S. dollar terms."
Last month, Jensen Huang, head of top U.S. chip designer Nvidia, said everyone in the tech world felt they could develop their AI and grow revenue "if they could just get more capacity."
Ahead of Thursday's earnings announcement, Ian Lyall at Proactive Investors said it appeared TSMC is "so deeply embedded in the AI supply chain that macro headwinds are struggling to leave a mark."
"The bleeding-edge manufacturing that only TSMC can reliably deliver at scale is running at capacity," he noted.
A weaker Taiwanese dollar had also boosted the firm's revenues from overseas sales. On Thursday, it said quarterly net revenue rose 35.1 percent year-on-year to NT$1.13 trillion.
A note from UBS analysts had predicted strong quarterly results for TSMC but warned that consumer demand was weakening as a result of higher prices caused by a global memory chip shortage that is a side-effect of the AI boom.
"Cloud AI demand continues to strengthen, but we think supply constraints will limit meaningful upside for TSMC this year," the UBS team said.
"Middle East tensions add a layer of macro uncertainty, but AI spend should stay insulated, barring a protracted conflict."
The UBS analysts predicted "limited disruption from tight helium supply on TSMC's production".
Helium gas is a key material in the chip supply chain, and Qatar – one of the countries affected by the war in the Middle East – is one of its few large-scale producers.
