A potential win for Taiwan as TSMC is well on its way to delivering another record quarter as AI spending drives demand for its most advanced chips.
Reuters reported that the company is set to post a 50% increase in net profit for the January to March quarter. Analysts expect net profit of T$542.6 billion, ($17.1 billion), according to an LSEG SmartEstimate based on 19 analysts. Any result above T$505.7 billion would be the highest quarterly net income in the company’s history and its ninth consecutive quarter of profit growth.
TSMC manufactures advanced chips for companies such as Nvidia and Apple. Its market capitalisation has reached about $1.6 trillion, almost double that of Samsung Electronics. Investors view it as a dominant supplier in AI hardware.
What Brings About This Rise In Profits?
AI infrastructure spending is the main thing bringing these profits in. Data centre operators are ordering more advanced processors to power AI models and those processors depend on TSMC’s most advanced manufacturing technology.
Last week the company reported a 35% YoY increase in Q1 revenue, which actually exceeds previous market forecasts, Reuters said. Higher revenue has translated into higher profit expectations for the quarter.
Demand for TSMC’s 3 nanometre technology is a lot higher than its current production capacity. These chips are used in high performance AI processors and premium consumer devices. Advanced packaging services are heavily booked as customers secure supply for AI servers.
Arthur Lai, head of technology research for Asia at Macquarie Capital, wrote in a note to clients: “We expect higher quarter-on-quarter revenue growth guidance for the second quarter of 2026, driven by sustained AI demand and advanced-node leadership.”
The AI infrastructure race is tightening supply and strengthening the position of advanced chipmakers. The ability to manufacture at the smallest nodes has become a decisive advantage, and TSMC holds that capability at scale.
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Can Production Keep Up With Demand?
Orders for TSMC’s most advanced processes surpass its available output. That gap between demand and capacity has been a recurring theme in analyst reports.
Investors will look to Thursday’s earnings call at 06:00 GMT for updated guidance on Q2 and the full year and any change to capital spending plans will spark interest.
Galen Zeng, senior research manager at IDC, said one area to watch is whether TSMC maintains or raises its 2026 capital spending plans as that will reflect management’s confidence in long term AI demand.
The company is investing $165 billion to build chip factories in Arizona in the United States. In Japan it has revised its manufacturing plans and is now set to produce 3 nanometre chips there instead of focusing on older technologies. These investments show the scale of spending required to meet demand for advanced chips.
What Risks Are In View?
The war in the US/Middle East threatens supplies of production materials such as helium and neon, which are used in semiconductor manufacturing.
Galen Zeng said: “TSMC’s diversified sourcing and safety stock should be sufficient to manage short-term disruptions.”
TSMC’s shares listed in Taipei have gained 28% this year, outperforming the broader market’s 22% increase, according to Reuters. Investors are backing the company as AI data centre spending rises and advanced chip supply stays tight.
If the company delivers T$542.6 billion in quarterly net profit, it will extend its run of record earnings, supported by sustained demand for AI chips.
