TL;DR
TSMC reported strong Q4 2025 and full-year revenue growth and told investors it expects multiyear demand from AI workloads. The company plans a fast ramp of its 2nm node in 2026, increased capital spending, and indicated continued price rises for advanced-node output.
What happened
Taiwan Semiconductor Manufacturing Company posted Q4 2025 revenue of $33.7 billion, up 25.5% year‑over‑year, and full‑year revenue of $122.5 billion, a 36% increase. Management offered guidance of $34–$35.8 billion for Q1 2026 and projected roughly 30% revenue growth for fiscal 2026. CEO C.C. Wei said rising adoption of AI models across consumer, enterprise and sovereign use cases is generating sustained demand for leading‑edge silicon; he noted customers typically engage TSMC two to three years ahead of production. TSMC said it will pursue substantial capital expenditure to meet demand—having spent $101 billion over the last three years and forecasting $52–$56 billion in 2026, with 70–80% earmarked for nodes 7nm and below. Finance leadership signaled that higher per‑unit capital requirements mean finished prices will increase, and noted wafer price hikes have occurred and are likely to continue. The company also expects a rapid ramp of its two‑nanometer process in 2026, with some volume production of an “A 16” variant starting in the second half of the year and about 30% of 2nm output coming from U.S. capacity.
Why it matters
- Sustained AI demand could keep pressure on global chip supply and prioritize advanced‑node capacity for AI and HPC customers.
- Large, continued capital investment by TSMC signals higher costs across the semiconductor production chain that are likely to be passed to customers.
- A fast 2nm ramp and partial U.S. production footprint could shift capacity balances and affect where advanced silicon is sourced.
- Ongoing wafer price increases and higher ASPs (average selling prices) may influence cloud, enterprise and device pricing and purchasing strategies.
Key facts
- Q4 2025 revenue: $33.7 billion, up 25.5% year‑over‑year.
- Full‑year 2025 revenue: $122.5 billion, up 36% versus prior year.
- Q1 2026 revenue guidance: $34.0–$35.8 billion; FY2026 revenue growth guidance: ~30%.
- TSMC spent $101 billion on capital expenditure over the past three years.
- Planned capex for 2026: $52–$56 billion; 70–80% targeted at 7nm and smaller (advanced) nodes.
- Management targets improving gross margin from 62.3% to 65% or better.
- Two TSMC fabs are already producing 2nm parts with reportedly good yields.
- Volume production of an “A 16” 2nm process variant intended for specific HPC products is expected to start in H2 2026.
- Approximately 30% of 2nm production is expected to take place in the United States.
- Executives indicated wafer price increases have occurred (analyst noted a ~20% hike) and said price rises will continue going forward.
What to watch next
- Progress of the 2nm A 16 volume ramp in the second half of 2026 and any updates on yields and capacity.
- Actual capital expenditure outturn for 2026 within the $52–$56 billion range and the split of that spend across fabs and regions.
- Magnitude and timing of further wafer price increases and how customers absorb or pass on those costs — not confirmed in the source.
Quick glossary
- 2nm process: A leading‑edge semiconductor manufacturing node that denotes a generation of transistor scaling and process technology used to make high‑performance chips.
- Wafer: A thin slice of semiconductor material, such as silicon, on which integrated circuits are fabricated before being diced into individual chips.
- Capital expenditure (capex): Money a company spends to buy, maintain, or upgrade physical assets such as factories, machinery and equipment.
- Leading‑edge node: The most advanced semiconductor manufacturing process generations (here defined by TSMC as 7nm and below) used to produce high‑performance, energy‑efficient chips.
- Gross margin: A profitability metric calculated as revenue minus cost of goods sold, expressed as a percentage of revenue.
Reader FAQ
Did TSMC report revenue growth in Q4 and full‑year 2025?
Yes. Q4 revenue was $33.7 billion (up 25.5% year‑over‑year) and full‑year revenue was $122.5 billion (up 36%).
Is TSMC increasing capital spending?
Yes. The company spent $101 billion over the past three years and forecast $52–$56 billion of capex for 2026, with 70–80% for advanced nodes.
Will TSMC raise prices for its wafers or products?
Company executives indicated price rises have taken place and said such increases “will continue” going forward; an analyst referenced a roughly 20% wafer price hike.
Is the 2nm process already in production?
Two plants are producing 2nm parts with reportedly good yields, and volume production of an “A 16” 2nm variant is expected to begin in H2 2026.
Will TSMC’s customers keep demanding chips at current rates beyond 2026?
Management said customers typically engage two to three years ahead of production and signaled multiyear AI demand, but long‑term demand beyond that window is not confirmed in the source.
AI + ML TSMC sees no signs of the AI boom slowing for at least two or three years 2nm process will go large this year, and bring inevitable price…
Sources
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