TSMC Projects AI Demand Surge Through 2028, Flags Chip Price Hikes Amid 2nm Expansion

Taiwan Semiconductor Manufacturing Company (TSMC) reported record-breaking quarterly revenue of $33.7 billion for Q4 2025, marking a 25.5% year-over-year increase. Full-year revenue reached $122.5 billion, up 36% from 2024, with net income exceeding $55 billion. The world's leading foundry projects Q1 2026 revenue between $34-$35.8 billion and forecasts sustained 30% annual growth throughout 2026.

Chairman and CEO C.C. Wei directly attributed this momentum to proliferating AI workloads: "We observe increasing AI model adoption across consumer, enterprise and sovereign AI segments driving need for more computation. Customers provide positive outlooks extending 2-3 years ahead, while cloud providers directly request capacity allocation." This aligns with TSMC's confirmation of multi-year commitments for advanced node capacity.

Manufacturing expansion requires unprecedented capital expenditure. CFO Jen-Chau Huang confirmed $101 billion invested over the past three years, with 2026 spending projected at $52-$56 billion – 70-80% allocated to nodes at 7nm and below. Huang explicitly linked wafer price increases to rising production costs: "Each new process generation requires higher capital expenditure. Price adjustments will continue going forward," referencing recent 20% hikes.

Process technology transitions accelerate in 2026:

• 2nm Ramp: Volume production begins with "good yield" at two fabs, featuring faster revenue scaling than 3nm
• A16 Node: Dedicated HPC variant optimized for complex signal routing/power delivery launches H2 2026
• Geographic Shift: 30% of 2nm output will originate from US facilities

For hardware enthusiasts tracking component pipelines, TSMC's roadmap signals:

1. Higher Flagship GPU/CPU Pricing: Foundry cost increases inevitably cascade to consumer hardware
2. Performance Benchmarks: A16's power delivery optimizations may enable higher sustained clocks for datacenter/HPC workloads
3. Supply Chain Implications: Diversified production could alleviate regional allocation constraints

Despite acknowledging the complexity of balancing factory construction, utilization rates, and cash flow, TSMC maintains gross margin targets above 65%. The company's guidance suggests insensitivity to pricing among premium smartphone and AI accelerator customers, indicating sustained demand elasticity for cutting-edge silicon.

Official financial documentation detailing TSMC's manufacturing roadmap and investor guidance is available through their Investor Relations portal.