Taiwan Semiconductor Manufacturing Co. reported a 42% year-over-year revenue increase in Q4 2025, driven by soaring demand for advanced AI chips, triggering a rally across its key technology partners and suppliers.
- TSMC reported Q4 2025 revenue of $20.3 billion, a 42% increase year-over-year.
- Net income reached $8.9 billion, with gross margin at 64.8%—a record high.
- TSMC plans $35 billion in capital spending over three years, including $15 billion for U.S. and Japanese fab expansions.
- Nvidia (NVDA) stock rose 11%, ASML (ASML) gained 9%, and Synopsys (SNPS) and Cadence (CDNS) both rose over 7%.
- The SOX index rose 8.3% in one week, outperforming the S&P 500.
- 2nm process node expected to enter high-volume production by late 2026.
Taiwan Semiconductor Manufacturing Co. (TSMC) posted Q4 2025 revenue of $20.3 billion, up from $14.3 billion in the same period the prior year, with net income reaching $8.9 billion—a 42% increase. The company attributed the growth to sustained demand for 3nm and 2nm process nodes, particularly for AI accelerators used by major cloud providers and tech firms. TSMC also announced a $35 billion capital expenditure plan over the next three years, with $15 billion allocated to expanding its fab capacity in the U.S. and Japan. The surge in TSMC’s results amplified investor enthusiasm for its ecosystem partners. Nvidia (NVDA) saw its stock rise 11% in two days following the earnings release, with its market cap now exceeding $2.4 trillion. ASML Holding (ASML) gained 9% after TSMC confirmed it would deploy more extreme ultraviolet (EUV) lithography systems, boosting ASML’s order backlog to €34 billion. Synopsys (SNPS) and Cadence Design Systems (CDNS) both rose over 7% as design software demand surged in tandem with advanced chip production. Market analysts note that TSMC’s gross margin expanded to 64.8% in Q4 2025, the highest in its history, reflecting strong pricing power and process leadership. This performance has redefined the semiconductor value chain, with companies reliant on TSMC’s cutting-edge nodes experiencing accelerated growth. The broader semiconductor index (SOX) rose 8.3% in the week following the earnings report, outpacing the S&P 500’s 2.1% gain. Investors are now pricing in continued AI-driven capital intensity, with TSMC’s 2nm node expected to enter high-volume production by late 2026. This momentum is fueling demand for related infrastructure, including high-performance packaging, advanced materials, and power management solutions.