TSMC Increases Capital Spending as Quarterly Profit Soars 35%
Taiwan-based TSMC, the world’s largest computer chip maker, announced plans to boost its capital spending by approximately 40 per cent this year following a reported 35 per cent increase in its net profit for the latest quarter, attributed to the surge in artificial intelligence, the company stated on Thursday. Taiwan Semiconductor Manufacturing Corp., a key supplier to firms such as Nvidia and Apple, announced a net profit of 506 billion new Taiwan dollars ($16 billion) for the October-December quarter, marking a 35 percent increase from the previous year, surpassing analysts’ expectations. TSMC announced on Thursday that its revenue for the last quarter rose by 21 percent compared to the same period last year, exceeding 1.046 trillion new Taiwan dollars ($33 billion).
TSMC announced its intention to increase its capital expenditure budget to a range of $52 billion to $56 billion for 2026, a significant rise from approximately $40 billion in the previous year. The company’s shares have risen over 8 percent since the start of the year, showcasing its robust standing in the AI-driven market. Other tech giants such as Microsoft, Meta, and Alphabet are making significant investments in AI infrastructure. “We expect our business to be supported by continuous strong demand for our leading edge process technologies,” Wendell Huang said in a conference call. He stated that spending would be significantly higher in the next three years.
The company’s shares listed in Taiwan have surged over 8 per cent since the start of the year, achieving record high levels this month. With a market capitalization – total outstanding shares times share price – of approximately $1.4 trillion, it stands as Asia’s most valuable company. Alphabet, Google’s parent, surpassed the $4 trillion market capitalization this month, becoming the fourth Big Tech company to achieve this milestone after Nvidia, Apple, and Microsoft. However, concerns regarding substantial investments in AI, which could potentially lead to a bubble, have resulted in occasional sell-offs.
TSMC has committed approximately $165 billion in investments in the U.S. and has announced that it is accelerating the construction of new plants in Arizona, aiming to establish a cluster of fabrication plants. According to a recent report, TSMC, a primary beneficiary of AI due to its leading position in advanced chip manufacturing, maintains an optimistic outlook. According to the sources, it is immune from market share shifts as almost every AI company relies on TSMC to manufacture chips, including application-specific integrated circuits and GPUs (graphics processing units). TSMC also possesses robust buffers with financially solid customers, they stated, even in the event of any short-term declines in demand.
