Taiwan Semiconductor Manufacturing Company posted a record net profit of $16 billion in its fourth quarter, representing 35% year-over-year growth. Revenues reached $18.5 billion, driven by robust demand for high-performance AI data-center chips. The company’s advanced 5-nanometer and 3-nanometer process technologies accounted for over 60% of total sales, as hyperscale cloud providers and major fabless partners accelerated orders to build out AI infrastructure.

TSMC announced plans to invest $56 billion in capital expenditures for the coming year, up from $40 billion in 2025. Roughly 70% of this budget will fund new fabs in Taiwan and the United States, with the remainder allocated to equipment upgrades at existing sites. Management emphasized that these investments are intended to alleviate current capacity constraints and support the ramp-up of the 2-nanometer node, which is scheduled for initial production in late 2026.

While the multi-year AI megatrend remains intact, TSMC faces several near-term headwinds. The company’s two-tiered pricing strategy has prompted pushback from smartphone clients, and Apple’s share of wafer revenue fell to 18% in the quarter. Capacity bottlenecks in the 3-nanometer line may delay customer orders, and the initial rollout of the 2-nanometer technology is trailing original timelines. Moreover, higher expenditures on overseas fabs could compress gross margins by up to 2 percentage points over the next two years.