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Taiwan Semiconductor Manufacturing Company: AI, Packaging, & Arizona Scale—Is This the Start of a New Semiconductor Cycle?

Taiwan Semiconductor Manufacturing Company Limited (TSMC) delivered a mixed set of results in its fourth quarter of 2025 and provided an outlook for the first quarter of 2026. On the positive side, TSMC reported a sequential increase in revenue and gross margin in the fourth quarter supported by strong demand for its leading-edge process technologies. The revenue in US dollar terms grew by 1.9% to NT$33.7 billion, slightly beating their guidance. The company’s gross margin also increased by 2.8 percentage points sequentially to 62.3%, benefiting from cost improvement initiatives and favorable foreign exchange rates, while the operating margin increased to 54%. A notable aspect of TSMC’s performance is the strong contribution from its advanced technologies, defined as 7-nanometer and below, which accounted for 77% of wafer revenue in the fourth quarter. This demonstrates the company’s leadership in high-end technology nodes, with the 3-nanometer process contributing 28% of wafer revenues.