Taiwan Semiconductor Manufacturing Co. is expected to report a 50% surge in first-quarter net profit on Thursday, as the world’s top chipmaker struggles to meet insatiable 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, said in a recent interview with CNBC.
The company is forecast to post a net profit of T$542.6 billion ($17.1 billion) for the January-March period, according to an LSEG SmartEstimate. That would be its highest-ever quarterly income. TSMC already announced that its first-quarter revenue jumped 35% year-on-year to NT$1.13 trillion ($35.67 billion).
The results have pushed TSMC’s market capitalization to nearly $1.6 trillion, almost double that of rival Samsung Electronics. The company's Taipei-listed shares have gained 28% this year, outperforming the broader market's 22% rise. The demand for its 3-nanometre technology and advanced packaging services from customers like Apple and Nvidia continues to exceed current production capacity.
To address the supply shortage, TSMC is accelerating its $165 billion investment to build three semiconductor fabrication plants in Arizona. The first fab is slated to begin production in 2025, with two more facilities coming online by 2030. The expansion is part of a broader move by companies like Samsung and Tesla to increase chip manufacturing in the United States.
While geopolitical tensions in the Middle East have threatened to disrupt the supply of key materials like helium and neon, analysts believe TSMC is well-positioned to handle short-term shocks. "TSMC's diversified sourcing and safety stock should be sufficient to manage short-term disruptions," said Galen Zeng, senior research manager at IDC.
The upcoming earnings call on Thursday will be closely watched for any revisions to the company's full-year capital expenditure plans, which are currently set as high as $56 billion for 2026. This figure will serve as a key indicator of management's confidence in long-term AI demand.
This article is for informational purposes only and does not constitute investment advice.
