Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading producer of advanced AI chips, reported a strong set of financial results for the fourth quarter and full year 2025, driven by surging demand for cutting-edge process technologies and the global AI boom.
TSMC Q4 2025 Financial Performance
In the fourth quarter of 2025, TSMC posted revenue of NT$1,046.09 billion, marking a 5.7 percent increase quarter on quarter from NT$989.92 billion and a 20.5 percent rise year on year from NT$868.46 billion in the same period of 2024.
Gross margin reached 62.3 percent, improving by 2.8 percentage points from the third quarter of 2025 and 3.3 percentage points from the fourth quarter of 2024. Operating margin also strengthened significantly, rising to 54.0 percent, up 3.4 percentage points sequentially and 5.0 percentage points year on year.
The quarterly performance reflected robust demand for TSMC’s leading-edge technologies, particularly from customers focused on artificial intelligence and high performance computing.
Full Year 2025 Results Highlight AI Momentum
For the full year 2025, TSMC reported net revenue of NT$3,809.05 billion, representing a 31.6 percent increase compared with 2024. In US dollar terms, revenue grew 35.9 percent to US$122.42 billion.
Full year gross margin improved to 59.9 percent, up from 56.1 percent in 2024, while operating margin climbed to 50.8 percent from 45.7 percent a year earlier. These gains underline TSMC’s ability to scale advanced manufacturing efficiently amid rising AI driven demand.
Advanced Process Technologies Drive Revenue
In the fourth quarter, 3 nanometer process technology accounted for 28 percent of total wafer revenue, while 5 nanometer and 7 nanometer technologies contributed 35 percent and 14 percent respectively. Overall, advanced technologies at 7 nanometer and below represented 77 percent of total wafer revenue in the quarter.
On a full year basis, 3 nanometer technology contributed 24 percent of wafer revenue in 2025, with 5 nanometer and 7 nanometer accounting for 36 percent and 14 percent respectively. Advanced technologies made up 74 percent of total wafer revenue for the year, up from 69 percent in 2024, highlighting the rapid shift toward leading-edge nodes.
Platform and Geographic Revenue Breakdown
By application platform in the fourth quarter of 2025, high performance computing accounted for 55 percent of net revenue, while smartphones represented 32 percent. IoT, automotive, data center enterprise, and other segments contributed 5 percent, 5 percent, 1 percent, and 2 percent respectively.
Sequentially, revenue from high performance computing rose 4 percent, smartphones increased 11 percent, IoT grew 3 percent, and other segments expanded 14 percent. Automotive and data center enterprise revenue declined 1 percent and 22 percent respectively compared with the third quarter.
Geographically, customers based in North America generated 74 percent of total net revenue in the fourth quarter. Asia Pacific and China each accounted for 9 percent, while Japan and EMEA contributed 4 percent each.
For the full year 2025, North America represented 75 percent of total net revenue, followed by Asia Pacific at 9 percent, China at 9 percent, Japan at 4 percent, and EMEA at 3 percent.
Capital Expenditure and AI Driven Expansion
TSMC’s capital expenditures totaled US$11.51 billion in the fourth quarter and US$40.90 billion for the full year 2025. Looking ahead, the company said capital spending could rise as much as 37 percent in 2026 to around US$56 billion, with further significant increases expected in 2028 and 2029 to support long term AI demand.
Outlook for 2026
TSMC said first quarter 2026 revenue could surge as much as 40 percent year on year to US$35.8 billion.
Riding what it calls the AI mega trend, TSMC forecast that 2026 revenue would rise by nearly 30 percent in US dollar terms, as customers such as Nvidia and Apple continue to signal strong demand and request additional capacity.
US Manufacturing Expansion Plans
TSMC is accelerating capacity expansion in both Taiwan and the United States. The company has already committed $100 billion in US investments, in addition to $65 billion pledged for three fabs in Arizona, one of which is operational. Chief Executive C.C. Wei said TSMC is applying for permits to build a fourth factory and its first advanced packaging plant in Arizona, with additional land already secured.
TSMC’s growing US footprint is expected to improve productivity, lower costs, and better serve American customers, while also aligning with evolving trade and tariff discussions between Taiwan and the United States.
BABURAJAN KIZHAKEDATH
