Taiwan computer chip maker TSMC's to expand investment as profit jumps 35%

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HONG KONG (AP) — Taiwan-based TSMC, the world’s largest computer chip maker, plans to increase its capital spending by as much as nearly 40% this year after it reported a 35% jump in its net profit for the latest quarter thanks to the boom in artificial intelligence, the company said Thursday.

Taiwan Semiconductor Manufacturing Corp., a major supplier to companies including Nvidia and Apple, reported a net profit of 506 billion new Taiwan dollars ($16 billion) for the October-December quarter, a 35% surge from a year earlier, better than analysts’ estimates.

TSMC said Thursday that its revenue in the last quarter increased 21% from a year earlier to more than 1.046 trillion new Taiwan dollars ($33 billion).

TSMC said it plans to boost its capital expenditure budget to $52 billion-$56 billion for 2026, up from about $40 billion last year. The company’s Taiwan-listed shares have climbed more than 6% since the beginning of the year, reflecting its strong position in the AI-driven market.

Other tech giants including Microsoft, Meta and Alphabet are spending big on investments in AI infrastructure.

“We expect our business to be supported by continuous strong demand for our leading edge process technologies,” Wendell Huang, TSMC's chief financial officer, said in a conference call. He said spending would be “significantly higher” in the next three years.

Asked about concerns over an AI bubble -- as critics point to ballooning investments which might not pay off -- TSMC chairman and CEO C. C. Wei said he is confident that the growing demand from customers is real.

“I'm also very nervous about it, you bet,” said Wei. “AI is real. Not only real, it's starting to grow into our daily life."

With a market capitalization -- total outstanding shares times share price -- of about $1.4 trillion, TSMC is Asia’s most valuable company.

Alphabet, Google’s parent, passed the $4 trillion market capitalization mark this month, the fourth Big Tech company to hit that mark after Nvidia, Apple and Microsoft, although concerns over massive spending on AI could turn into a bubble had led to occasional sell-offs.

TSMC has pledged around $165 billion of investments in the U.S. and said Thursday it’s speeding up construction of new plants in Arizona, looking to create a fabrication plant cluster and meet strong demand from clients.

A primary beneficiary of AI, given its dominant share in cutting-edge chip manufacturing, TSMC’s outlook remains optimistic, analysts from Morningstar said in a recent report.

“It is immune from market share shifts as almost every AI company relies on TSMC to make chips ranging from application-specific integrated circuits to GPUs (graphics processing units),” the Morningstar analysts said.

TSMC also has strong buffers with “deep-pocked” customers, they said, even if there are any short term drops in demand.