Growth of TSMC Profit Bomb Generates AI Chip Mania

The net profit growth rate at Taiwan Semiconductor Manufacturing Co. (TSMC) now has reached its peak like no other since it is projected that the net profit will grow by 27% in the fourth quarter of 2025 with a total net profit becoming up to T$475.2 billion  ($15.02 billion). T

The company owes this tremendous growth to continued artificial intelligence (AI) demand and the eighth consecutive quarter profit growth. 

The challenge of producing every 3nm of manufacturing capacity, which is mainly used in the production of the Apple A19 iPhone17 processor and the Nvidia accelerator products has been cited as one of the key drivers behind this boom. 

The validity of the forecast is supported by the LSEG Smart Estimate which is based on the composite of the views of nineteen experts in the sector.

Earnings Powerhouse

In the fourth quarter, TSMC made revenue that had been 20.45 % higher than estimated in the market, and the expectation is to keep the entire year revenue at NT$3.81 2.5 billion, a 32 % increase over the 2024 levels. 

The market capitalization of the company of $1.678 trillion is larger than that of Samsung and Taiwanese shares have risen up by 44.2% in the previous year when compared to a wider market increase of 25.7%. 

The company has already broken new records with profits totaling above T$452.3 billion, by a 78% rise in year-to-year demand for AI servers.  

Expert Insights  

CEO C.C. Wei, discussing the company’s position on the call, said,

“Recent developments in the AI market continue to be very positive,” and management described growing demand from chip designers and cloud operators as strengthening TSMC’s conviction in the “AI megatrend.”

Zeng said, adding that the market is projected to grow 78% year-over-year in 2026. 

“The main driver is the explosive growth of the AI server accelerator manufacturing market,”

Global Expansion Risks

TSMC has declared a plan of capital formation amount of $165 billion to construct semiconductor fabrication plants in Arizona, hence increasing capacity in the United States in the situation of trade tariffs resulting in a prior administration. 

However, the gain in margin due to the use of 2nm process technology may be compromised by accelerated international deployment due to the increased pricing competition.

Bright 2026 Horizon

Projections of revenue growth are raised by analysts who highlight the important role of the new process line to the total sales and enhanced by high-premium pricing because of strong investment in artificial intelligence. 

Massive implementation together with sharp demand growth concentrates the market power regardless of the geopolitical forces. The third conference call on Q4 earnings of 2025, which will be held on Thursday morning, will develop accurate quarterly guidance, thus showing the direction in which further operations will be run.