Taiwan Semiconductor Manufacturing Co (TSMC) is expected to register yet another quarter of unprecedented profitability as demand for AI-focused chips continues to stretch its production limits. Analysts tracking the world’s largest manufacturer of advanced AI semiconductors place the January-March net profit estimate at T$542.6 billion ($17.1 billion) based on an LSEG SmartEstimate aggregating forecasts from 19 analysts.
The SmartEstimate methodology gives greater weight to analysts who have demonstrated consistent accuracy in their projections. TSMC is scheduled to release its quarterly results and provide updated second-quarter and full-year guidance during an earnings call set for 0600 GMT.
If the company posts net income above T$505.7 billion, it would represent its highest-ever quarterly net income and mark a ninth consecutive quarter of profit growth. The elevated profit projection follows a reported 35% year-on-year increase in first-quarter revenue announced last week, a figure that exceeded market forecasts.
Analysts point to constrained capacity for the most advanced manufacturing processes as a primary factor behind the surge. Demand for TSMC’s 3-nanometre node, used to build AI chips, alongside its advanced packaging capabilities, continues to outpace the firm’s current production throughput. That imbalance between demand and capacity has propelled the company to new market valuations - TSMC’s market capitalisation now stands near $1.6 trillion, roughly double that of South Korean peer Samsung Electronics.
Market strategists expect the company to reflect this sustained AI-driven demand in upcoming guidance. Arthur Lai, head of technology research for Asia at Macquarie Capital, said in a client note that higher quarter-on-quarter revenue guidance for the second quarter of 2026 is anticipated, citing ongoing AI demand and TSMC’s leadership on advanced nodes.
Geopolitical risk factors have also drawn investor attention. The conflict in the Middle East poses a potential disruption to supplies of critical semiconductor production materials such as helium and neon. IDC’s Galen Zeng assessed TSMC as relatively well positioned to manage short-term supply shocks, pointing to diversified sourcing arrangements and safety stock as buffers against immediate disruptions.
Investment decisions by management will be closely scrutinized for their signal on long-term demand expectations. One focal point is whether TSMC will maintain or increase its capital expenditure plan for 2026 - a decision that would indicate confidence in sustained long-term demand for AI infrastructure. Current expansion plans include a $165 billion investment to build chip fabs in Arizona, and an updated approach in Japan that now envisions manufacturing 3-nanometre chips there instead of focusing on more mature process nodes.
On the market front, TSMC’s shares listed in Taipei have risen 28% so far this year, outpacing a 22% gain in the broader market. Currency conversion noted in market reports places $1 at 31.7730 Taiwan dollars.
What to watch next
- The quarterly net profit announced versus the SmartEstimate of T$542.6 billion.
- Management guidance for the second quarter and any revisions to 2026 capital expenditure plans.
- Statements on capacity expansion timing for 3-nanometre production and advanced packaging throughput.