TSMC tops revenue expectations amid strong demand for advanced nodes – News

Continuing its growth streak, Taiwan Semiconductor Manufacturing Co. today posted fourth-quarter revenue and profit numbers that easily topped the consensus estimate.

The company also disclosed that it plans to boost its capital expenditure significantly this year.

TSMC’s revenue rose 20.5% year-over-year in the fourth quarter, to 1.046 trillion new Taiwan dollars, or $33.73 billion. Analysts had expected $33 billion. More than half of TSMC’s revenue came from its advanced technologies segment, which includes the seven-nanometer node that it introduced in 2018 and the more capable processes it has introduced since.

The company’s most popular node is its five-nanometer process, which accounted for over 35% of its sales in the fourth quarter. Its three-nanometer node took second place with a 23% share of sales. TSMC’s newest and most advanced chipmaking technology, the two-nanometer 2N process it launched in the fourth quarter, isn’t yet a meaningful revenue driver.

The N2 process features transistors made of nanosheets. Those are microscopic structures up to a few dozen atoms thick. N2’s nanosheets enable TSMC customers to adjust the width of the transistors in their chips, which makes it easier to find an optimal balance between performance and cost. Increasing the width of a nanosheet transistor boosts the current it can conduct, which speeds up processing.

The N2 node also includes a technology called NanoFlex. It enables engineers to place transistors with different nanosheet widths on the same chip. Circuits that need to maximize performance can be made with broad nanosheets, while less advanced components can use a more power-efficient transistor configuration.

TSMC is already working on two successors to N2. The more advanced of the two, which is known as the A14 node, will include an enhanced version of the company’s NanoFlex technology. TSMC estimates that chips based on the process will provide a 14% speedup over N2 using the same amount of power.

The company’s advanced nodes are part of its high-performance computing, or HPC, revenue segment. The business also includes TSMC’s optical networking and three-dimensional packaging technologies. HPC chip contracts accounted for 55% of TSMC’s sales in the fourth quarter, 4% more than a year earlier. The smartphone market was the company’s second-largest source of revenue at 32%.

TSMC’s strong top line helped boost its profitability. The company ended the fourth quarter with net income of $16.03 billion, well above the $15.16 billion that the market had projected. That represents a 54% operating margin.

TSMC expects to end the current quarter with an operating margin of 54% to 56%, while its revenue is projected to be between $34.6 billion and $35.8 billion. The latter range represents a 38% year-over-year jump at the midpoint. TSMC estimates that the increase will be driven partly by continued demand for its most advanced processes.

The company will boost its capital expenditure, which includes big-ticket purchases such as lithography machines, to expand its advanced node capacity. TSMC expects to invest between $52 billion and $56 billion this year, a significant increase over the $40.9 billion it spent in 2025.

Photo: TSMC