BY EMMANUEL OGBONNA
Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, said Thursday it plans to sharply increase capital spending this year after reporting a strong jump in quarterly profits and revenue driven by soaring demand for artificial intelligence technologies.
The Taiwan-based company, a crucial supplier to global technology leaders including Nvidia and Apple, posted a net profit of 506 billion new Taiwan dollars, or about $16 billion, for the October-to-December quarter. That marked a 35% increase from the same period a year earlier and exceeded market expectations, underscoring the company’s dominant position at the center of the AI supply chain.
Revenue for the quarter climbed 21% from a year earlier to more than 1.046 trillion new Taiwan dollars, roughly $33 billion, reflecting sustained demand for advanced chips used in data centers, high-performance computing and AI applications.
Buoyed by the results, TSMC said it plans to lift its capital expenditure budget to between $52 billion and $56 billion for 2026, up from about $40 billion last year. The company’s shares have gained more than 8% since the start of the year, highlighting investor confidence in its long-term growth prospects as AI reshapes the technology landscape.
“We expect our business to be supported by continuous strong demand for our leading-edge process technologies,” Chief Financial Officer Wendell Huang said during a conference call with analysts. Huang added that capital spending would remain “significantly higher” over the next three years as the company expands capacity to meet customer needs.
TSMC’s outlook aligns with broader trends across the tech industry, where companies such as Microsoft, Meta and Alphabet are pouring billions of dollars into AI infrastructure, including advanced chips and data centers. Those investments have fueled a rally in technology stocks, even as some analysts warn that the scale of spending could eventually outpace returns.
Addressing concerns about a potential AI investment bubble, TSMC Chairman and Chief Executive C.C. Wei said he remains confident that customer demand is genuine and sustainable. “I’m also very nervous about it, you bet,” Wei said, acknowledging the risks. “But AI is real. Not only real, it’s starting to grow into our daily life.”
TSMC’s Taiwan-listed shares have climbed more than 6% this year and reached record highs earlier this month. With a market capitalization of around $1.4 trillion, the company is now the most valuable firm in Asia, reflecting its outsized role in producing the most advanced chips available.
The surge in valuation comes as other technology giants continue to break records. Alphabet, the parent company of Google, crossed the $4 trillion market capitalization threshold this month, joining Nvidia, Apple and Microsoft. Still, bouts of volatility have emerged as investors periodically reassess whether massive AI spending will translate into sustained profits.
TSMC is also expanding aggressively outside Taiwan. The company has committed roughly $165 billion to investments in the United States and said it is accelerating construction of new semiconductor plants in Arizona. The goal is to create a major manufacturing hub that can serve U.S. customers and diversify production as geopolitical tensions and supply chain risks remain in focus.
Analysts say TSMC is uniquely positioned to benefit from the AI boom because of its near-monopoly on cutting-edge chip manufacturing. In a recent report, Morningstar described the company as largely insulated from market share shifts, noting that virtually every major AI player depends on TSMC to produce chips ranging from specialized processors to powerful graphics processing units.
The company also benefits from a customer base with deep financial resources, analysts said, giving it resilience even if demand were to soften temporarily. For now, however, the momentum appears firmly in TSMC’s favor, as artificial intelligence moves from a niche technology into a core driver of global economic growth.
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