Taiwan Semiconductor Manufacturing Co. (TSMC) reported fourth-quarter revenue of T$1,046.08 billion (approximately $33.05 billion), marking a 20% year-over-year increase driven by surging orders for AI-optimized chips. The company’s gross margin expanded to 57.8%, supported by strong sales of advanced 5 nm and 3 nm logic nodes for customers including Nvidia and Apple. TSMC’s foundry capacity utilization exceeded 95% in the period, underscoring continued tightness in wafer supply as data-center operators ramp up spending on new AI server fleets.

Analysts warn that elevated memory prices could strain TSMC’s handset business, which accounted for roughly 30% of Q3 revenue. TrendForce data suggests DRAM contract prices may climb 55%–60% and NAND prices 33%–38% in Q1 2026 as high-bandwidth memory (HBM) supply remains constrained. Higher component costs risk prompting smartphone makers to delay model upgrades or trim production runs, potentially narrowing TSMC’s near-term growth in the mobile segment.

Looking ahead, TSMC plans to double its 2 nanometer chip capacity by year-end, with volume production already commencing at Fab 22 in Kaohsiung. Investors point to a forward price-to-earnings ratio of 31x—below peers such as Nvidia—despite consensus forecasts for 25% earnings growth in 2026. With a 72% foundry market share and planned capital expenditures of over $40 billion to bolster AI node output, TSMC is positioned to sustain above-market growth as global AI infrastructure investment ramps up.