(April 16): Taiwan Semiconductor Manufacturing Co (TSMC) raised its revenue outlook for 2026, an upbeat forecast that underscores the resilience of AI chip demand despite concerns about the economic fallout from the Middle Eastern conflict.
The main chipmaker to Nvidia Corp and Apple Inc is expecting revenue growth of more than 30% this year, an upgrade from its previous guidance for below that number. Executives also said the company’s capital spending should lean towards the upper end of an existing forecast range of as much as US$56 billion, conveying confidence in the year’s economic outlook.
Taiwan’s largest company delivered its projection after reporting a surprisingly strong 58% surge in profit, a sign that the Middle East war in its first few weeks at least hasn’t depressed AI investment. The results may help quell concerns that the conflict will dampen demand for power-hungry AI data centres and gadgets like the iPhone.
Still, TSMC executives warned Thursday that the war could eventually hurt profitability: a nod to the uncertainty surrounding the situation. The war has put pressure on global shipping routes and energy prices, and investors are looking for clues as to whether its impact will spread to tech giants’ spending plans.
TSMC reported net income for the March quarter of NT$572.5 billion (US$18 billion), versus the average analysts’ projection of NT$542.4 billion. The company this month posted a better-than-anticipated 35% jump in revenue.
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TSMC, which makes the vast majority of the world’s most advanced semiconductors, is a primary beneficiary of a global race to build AI infrastructure given it’s a central partner to Nvidia, Advanced Micro Devices Inc and Broadcom Inc. Its shares have gained about 30% this year, outperforming its major customers.
But the Asian chipmaker and its top customers such as Nvidia face increasing skepticism they can keep growing at current rates, despite pledges from Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp to allocate US$650 billion for AI expenditures this year.
There is speculation that the Middle East war could disrupt supplies of critical chipmaking components and gases such as helium. Equipment supply constraints may also cap growth for the US$1 trillion chip industry, as the likes of ASML Holding NV cannot add capacity fast enough to satisfy demand for cutting-edge machines from customers, including TSMC.
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It’s also grappling with concerns that a persistent crunch of memory chips — a component that TSMC does not make — will shrink the global smartphone market for the first time since 2023. The Taiwanese chipmaker said at the beginning of 2026 that it supplies mostly high-end smartphones, which still saw strong demand and remain less sensitive to a price hike in storage components.
And as chips become a strategic asset for countries and companies pursuing AI, TSMC faces new challengers trying to enter the white-hot field.
Elon Musk is moving ahead with his ambitious Terafab project to make chips for the billionaire’s ventures including Tesla Inc, SpaceX and xAI, while Tokyo is backing Rapidus Corp in the hope that the startup can start to produce cutting-edge chips in 2027.
Uploaded by Liza Shireen Koshy
