TSMC Q1 profit jumps 58% on insatiable AI demand

Taiwan Semiconductor Manufacturing Co. posted a record 58% jump in first-quarter net profit, beating market forecasts as the company struggles to meet overwhelming global demand for its advanced artificial intelligence processors.

“We have strong conviction on the AI mega trend and that is the reason we are stepping up the capital expenditures to expand in Taiwan and in the US,” Wendell Huang, Chief Financial Officer at TSMC, told CNBC.

The chipmaker reported first-quarter net revenue of NT$1.134 trillion ($35.67 billion), a 35% increase from the same period a year ago. Demand is surging for the company's 3-nanometre and advanced packaging technologies, essential for building processors for AI leaders like Nvidia and Apple.

The record earnings reinforce the semiconductor industry's central role in the AI buildout and are likely to lift the sector. The results put pressure on competitors like Samsung Electronics and Intel, who are racing to catch up to TSMC's manufacturing lead. To meet the demand, TSMC is accelerating a massive $165 billion investment in Arizona, which includes plans for six semiconductor fabs and two advanced packaging facilities. The first three fabs alone are projected to create 6,000 direct jobs.

AI Demand Outstrips Supply

The insatiable demand for AI chips has created a supply-demand gap that benefits foundries. Elon Musk, CEO of Tesla, recently stated he would buy all the advanced semiconductors that TSMC and Samsung can produce. This sentiment is echoed across the tech industry, solidifying the bullish outlook for chip manufacturers.

"We expect higher quarter-on-quarter revenue growth guidance for the second quarter of 2026, driven by sustained AI demand and advanced-node leadership," Arthur Lai, head of technology research for Asia at Macquarie Capital, said in a client note. TSMC's Taipei-listed shares have already gained 28% this year, outperforming the broader market's 22% rise.

Helium Supply Risks Contained

Despite the strong performance, the industry faces potential headwinds from the closure of the Strait of Hormuz, which has disrupted the supply of helium needed for manufacturing. However, TSMC stated it does not anticipate significant near-term impacts, citing diversified sourcing contracts, high on-site recycling rates of 80-90%, and existing inventories. Rivals Samsung Electronics and SK Hynix report having four to six months of helium inventory.

This article is for informational purposes only and does not constitute investment advice.