Buoyed by seemingly insatiable demand for artificial intelligence (AI) infrastructure, the world's largest AI chip manufacturer, Taiwan Semiconductor Manufacturing (TSM.US), is projected to see its net profit for the fourth quarter of 2025 surge by 27%, reaching a historic peak. According to a survey of 19 analysts by LSEG SmartEstimate, TSMC is anticipated to achieve a net profit of NT$475.2 billion (approximately US$15.02 billion) for the three months ending December 31, 2025. Provided the announced actual net profit exceeds NT$452.3 billion, it will mark the highest quarterly net profit on record and represent the eighth consecutive quarter of profit growth.
TSMC last week reported better-than-expected Q4 2025 revenue figures, which leaped approximately 20% to NT$10.5 trillion (around US$33.1 billion), surpassing market expectations of NT$10.2 trillion. Galen Zeng, Senior Research Manager at market research firm IDC, stated that the revenue growth in Q4 2025 was driven by the full utilization of TSMC's 3-nanometer process capacity, propelled by the iPhone 17 series using Apple's A19 chip and sustained robust AI demand.
Since ChatGPT ignited the AI wave, TSMC has been one of the foremost beneficiaries, capitalizing on its pivotal role in manufacturing advanced AI chips. Looking ahead, Galen Zeng indicated that, given the surge in demand for AI server accelerators and the significant contribution expected from TSMC's next-generation 2-nanometer process technology, IDC forecasts TSMC's US-dollar-denominated revenue will grow by 25%-30% in 2026, up from a previous projection of 22%-26%.
"The primary driver is the explosive growth in the AI server accelerator manufacturing market," Galen Zeng said, adding that this market is expected to achieve a 78% year-on-year increase in 2026. Shay Boloor, Chief Market Strategist at Futurum Equities, noted that AI demand is clearly accelerating, and TSMC continues to expand its market share in advanced processes while competitors struggle to keep pace.
However, he also pointed out that the faster-than-expected expansion of overseas wafer fabrication plants could potentially dilute the profit growth TSMC anticipates from its 2-nanometer process and pricing strategies. It is reported that TSMC is investing $165 billion to construct chip plants in Arizona, USA. In a podcast released last week, US Commerce Secretary Lutnick stated that TSMC will make further investments in the United States.
Furthermore, the potential impact of US President Trump's tariff policies on TSMC remains unclear. Exports from the Taiwan region of China to the United States face a 20% tariff, with the exception of chips.