Taiwan Semiconductor Manufacturing delivered 35.9% year-over-year revenue growth in 2025, driven primarily by surging demand for advanced AI chips. Total revenue for the year reached $XXX billion, with high-performance computing applications accounting for 55% of Q4 sales and smartphone chips contributing the remaining 45%. Management has increased its 2026 capital expenditure guidance to a record $52–56 billion, well above consensus forecasts of $41 billion. This aggressive investment plan underscores the company’s confidence in sustained AI data center build-out and positions it to add capacity ahead of competitors.

The company cemented its status as the industry’s leading foundry by capturing 77% of wafer revenue from nodes at 7 nanometers and below in Q4, up from 74% a year earlier. Its flagship 3 nm technology accounted for 28% of total wafer revenue, reflecting strong win rates with major cloud and AI customers. Meanwhile, early customer tape-outs for the forthcoming 2 nm platform have already begun, setting the stage for next-generation performance gains and further widening the technical moat against rivals struggling to scale sub-5 nm processes.

Fourth-quarter gross margin expanded by 330 basis points to 62.3%, surpassing the prior guidance range of 59–61%, while operating margin climbed 500 basis points to 54%. Earnings per ADR rose 40% year-over-year to $3.14. For Q1 2026, the company forecasts revenue of $34.6–35.8 billion, implying 38% growth at the mid-point, and projects margins to remain robust with a gross margin range of 63–65% and operating margin of 54–56%. Full-year 2026 revenue growth is expected to reach approximately 30%, reflecting strong visibility into AI chip backlogs and ongoing fab expansions.

In response to escalating global demand and supply-chain considerations, the company has accelerated its overseas fab projects. Construction is underway on a new facility in the United States, slated to begin production in late 2025, and expansions at its existing Taiwan sites will add over 1 million wafer starts per month by 2027. These investments aim to mitigate geopolitical risks, secure customer commitments, and ensure a steady ramp of high-margin, cutting-edge capacity ahead of the broader industry.