Chipmaking titan TSMC reported on Thursday a forecast-busting net profit for the fourth quarter in a sign that global demand for artificial intelligence technology is not waning.
The Taiwan Semiconductor Manufacturing Company (TSMC) is the world's biggest contract maker of microchips used in everything from Apple phones to Nvidia's cutting-edge AI hardware.
The company has been a significant beneficiary of the AI revolution, which has seen tech giants invest billions of dollars in chips, servers and data centers.
Some market watchers fear that the bubble of excitement surrounding AI could burst and cause a stock rout, but TSMC's results marked the latest high point for the firm.
"Our conviction in the multiyear AI mega trend remains strong, and we believe the demand for semiconductors will continue to be very fundamental," TSMC's Chairperson CC Wei said.
"By expanding our global footprint while continuing to invest in Taiwan, TSMC can continue to be the trusted technology and capacity provider of the global logic industry for years to come."
TSMC said net profit for the three months to December increased 35% year-over-year to NT$505.7 billion ($16 billion), beating the NT$466.69 billion forecast by analysts surveyed by Bloomberg News.
Net revenue for the fourth quarter rose 20.5% from a year ago to NT$1.05 trillion, TSMC said, also beating expectations.
TSMC – a bellwether for AI investment – expects capital spending to reach as high as $56 billion in 2026.
U.S. pressure
Self-ruled Taiwan is a powerhouse in the manufacturing of semiconductor chips, which are the lifeblood of the global economy, as well as other electronics.
The strong results came after Taipei said it had reached a "general consensus" with the U.S. on a trade deal that the island hopes will reduce its current 20% tariff and shield its semiconductor industry from levies.
Taiwan has previously vowed to increase investment in the U.S., purchase more U.S. energy and boost defense spending in a bid to head off U.S. President Donald Trump's sweeping tariffs.
The U.S. government launched investigations under Section 232 into semiconductors and chipmaking equipment last year. Section 232 refers to part of the U.S. Trade Expansion Act that allows tariffs to be imposed when national security is found to be at risk.
Trump signed an order Wednesday imposing a 25% tariff on semiconductors that are "transshipped through the U.S. to other foreign countries" – enabling the government to take a cut from chips sold to China.
Taiwan has been under pressure to move more chip production to U.S. soil. TSMC pledged last year to invest an additional $100 billion in the U.S.
But Trump's administration has made clear it wants more of the critical technology made in the U.S.
TSMC's global expansion, along with "new investments, specialty technologies and inflationary costs," were contributing to "cost challenges," chief financial officer Wendell Huang warned.
Despite U.S. pressure and the constant threat of invasion from China, which claims Taiwan is part of its territory, the island plans to keep making the "most advanced" chips on home ground, Taiwanese Deputy Foreign Minister Francois Chih-chung Wu told Agence France-Presse (AFP) recently.