Skip to content 
When the company that makes 90% of the world’s most advanced chips posts a $16 billion quarter and immediately announces plans to spend $56 billion more, you know something extraordinary is happening in tech.
Taiwan Semiconductor Manufacturing Company just delivered numbers that shattered expectations. Profits jumped 35% to record levels. The company crossed $100 billion in annual revenue for the first time ever. Gross margins hit a stunning 62.3%, the kind of profitability you’d expect from a software giant, not a capital-intensive chip manufacturer.
But here’s what really caught Wall Street’s attention: TSMC is forecasting revenue could surge 40% in the first quarter and grow close to 30% for the full year 2026. They’ve raised their five-year revenue growth forecast from 20% to 25% or higher. And they’re planning to spend between $52 billion and $56 billion in capital expenditure this year alone, a nearly 30% jump, with spending set to increase “significantly” through 2028 and 2029.
This isn’t incremental growth. This is a company watching demand explode in real time and racing to keep up.
The scorecard
TSMC just posted numbers that would make any CFO weep with joy. Net profit for the October-December quarter hit $16 billion, beating estimates and marking the seventh consecutive quarter of double-digit profit growth.
The real milestone? TSMC surpassed $100 billion in annual revenue for the first time in 2025. And the profitability is stunning. TSMC hit a 62.3% gross margin in Q4, beating its own guidance. CFO Wendell Huang raised the bar even higher, saying the company now expects margins of 56% or higher to be sustainable long-term. Those are software company margins, not semiconductor manufacturer margins.
First-quarter revenue could surge 40% year-over-year to $35.8 billion. For 2026, they’re expecting revenue growth of close to 30%. TSMC also raised its five-year revenue growth forecast from 20% to 25% or higher through 2029. And AI chip revenues alone? Expected to grow 56% annually between 2026 and 2029.
Why this matters
TSMC produces more than 90% of the world’s cutting-edge chips. When Nvidia needs AI processors, Apple needs iPhone chips, or AMD needs anything advanced, there’s only one name: TSMC.
This dominance has made TSMC the world’s sixth-largest company with a $1.4 trillion market cap. That’s more than double Samsung’s valuation. The company’s shares have jumped 53% over the past year, crushing the broader Taiwanese market’s 25.7% gain.
When TSMC reports earnings like these, the ripple effects are massive. ASML Holding, which makes the machines TSMC uses for its most advanced chips, saw its shares jump 7.6% to a record high, pushing its market value beyond $500 billion. Samsung forecast record quarterly earnings. Nvidia CEO Jensen Huang says H200 chip demand remains “very high.” Everyone in the chip industry is seeing relentless AI demand.
The AI gold rush
Cloud providers like Google, Amazon, and Microsoft are pouring money into AI infrastructure. The total planned expenditure across the industry has surpassed $1 trillion.
CEO Wei put it simply: “Capacity is very tight right now.” TSMC can barely keep up. Customers aren’t just placing normal orders; they’re reaching out directly to request capacity, giving “strong signals” about future demand.
Why Wei is nervous (but betting anyway)
Investing $56 billion isn’t casual. If AI demand evaporates, TSMC would face massive overcapacity. It would be, as Wei said, “a big disaster for TSMC.”
But Wei has done his homework. He’s talked to cloud service providers, examined their evidence, and checked their financials. His conclusion? “They showed me the evidence, and I’m quite satisfied. I also double-checked their financial status, and they are quite rich.”
These aren’t dot-com bubble companies burning cash on promises. These are the most profitable corporations on earth making calculated bets with real business models.
Going global, especially American
TSMC is building in Japan (second fab under construction) and Germany, but the big moves are in the United States. The company has committed $165 billion to US expansion, including $65 billion for three Arizona plants. One is already operational.
Wei mentioned TSMC has purchased additional land in Arizona and is “accelerating construction and production starts.” Reports suggest the Trump administration wants TSMC to build at least five more Arizona facilities as part of a trade deal that would cut tariffs on Taiwanese imports from 20% to 15%.
US Secretary of Commerce Howard Lutnick hinted in a podcast that TSMC would invest even more. Wei confirmed: “We are going to expand many fabs over there.”
The memory problem
There’s a growing issue: an acute shortage of high-bandwidth memory (HBM) chips that work with AI processors. Memory manufacturers prioritized these premium chips over standard memory for smartphones and consumer electronics, creating a supply crunch.
IDC slashed smartphone shipment estimates. Macquarie Capital predicts an 11.6% decline in smartphone sales in 2026 due to the shortage and resulting price increases. This matters because Apple and Qualcomm smartphone chips represent substantial TSMC revenue.
But Wei dismissed the concerns. High-end smartphones using TSMC’s most advanced chips are still selling well. The crunch is hitting mid-range and budget phones harder, which don’t use TSMC’s cutting-edge processes anyway.
The bottom line
TSMC is making an unprecedented bet on AI. Record profits with stunning margins. Capacity so tight they can barely meet demand. Deep-pocketed customers with long-term plans. Competitors throughout the ecosystem seeing the same signals.
But Wei’s nervousness reminds us the future isn’t guaranteed. The semiconductor industry has seen boom-and-bust cycles before.
What is certain: TSMC is going all-in. They’re committing unprecedented capital to expand globally, raising profit targets and revenue forecasts, and pulling suppliers like ASML along for the ride.
When the company making 90% of the world’s most advanced chips makes a bet this big, the rest of us should pay attention. Because if they’re right, we’re at the beginning of something massive. And if they’re wrong? That would be one very expensive mistake, not just for TSMC but for the entire technology industry following their lead.
For now, the smart money is on TSMC being right. Record earnings, surging stock prices across the supply chain, and a CEO who’s nervous enough to be careful but confident enough to bet big. That’s exactly what you want when navigating uncharted territory.
Disclaimer – This article draws from sources such as the Financial Times, Bloomberg,and other reputed media houses. Please note, this blog post is intended for general educational purposes only and does not serve as an offer, recommendation, or solicitation to buy or sell any securities. It may contain forward-looking statements, and actual outcomes can vary due to numerous factors. Past performance of any security does not guarantee future results.This blog is for informational purposes only. Neither the information contained herein, nor any opinion expressed, should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives.The information and opinions contained in the report were considered by VF Securities, Inc.to be valid when published. Any person placing reliance on the blog does so entirely at his or her own risk, and does not accept any liability as a result.Securities markets may be subject to rapid and unexpected price movements, and past performance is not necessarily an indication of future performance. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding investment in securities markets.Past performance is not a guarantee of future results
