AI

Data center, consumer device chips boost TSMC’s revenue

Taiwan Semiconductor Manufacturing Co. today posted first-quarter revenue and profit numbers that topped the consensus estimate. 

The company’s data center and consumer device chip businesses played a major role in the earnings beat. 

TSMC closed the first three months of the year with sales of 1.134 trillion new Taiwan dollars, or about $35 billion, a 35% increase from a year earlier. The company topped the consensus estimate by a hair. TSMC says 74% of its wafer revenue came from its advanced technologies segment, which includes the seven-nanometer node it launched in 2018 and the newer processes it has introduced since.

The company’s most popular manufacturing technology is the three-nanometer node that came online in 2020. Chips made using the process accounted for 36% of TSMC’s sales. The company’s newer three-nanometer technology’s share of revenue, in turn, rose to 25% from 22% a year earlier.

The chipmaker does not yet break out sales numbers for its newest two-nanometer node. The technology entered mass production late last year, but TSMC is still in the process of ramping up manufacturing capacity. The company currently makes two-nanometer products at two of its 11 fabs.

TSMC is developing a new version of the node, N2P, that is expected to enter volume production in the second half of 2026. It will provide 5% better performance than standard two-nanometer chips. TSMC estimates that the technology “could account for the majority of N2 adoptions” in the future. 

The company plans to follow up N2P with an even faster technology called N2X. According to TSMC, it’s optimized for high-speed data center chips such as graphics cards.

Processors comprise building blocks called cells that each contain a relatively small number of transistors. N2X includes two types of cells: a standard design and a “high-speed device.” TSMC will embed cells based on the latter technology into the most important parts of N2X customers’ server chips to boost performance.

TSMC’s high-performance computing segment, which includes data center chips, saw its revenue surge 20% quarter-over-quarter. On a sequential basis, it was the chipmaker’s second fastest-growing business behind the DCE segment. TSMC’s DCE, or digital consumer electronics, unit makes chips for gadgets such as smart TVs and virtual reality headsets. Its sales grew 28% quarter-over-quarter.

The chipmaker manufactures DCE processors using a half-dozen legacy nodes, the newest of which launched in 2019. Customers can have the company equip their chips with embedded RRAM memory, a specialized variety of RAM optimized for power-efficiency.

The increased chip demand had a positive effect on TSMC’s profitability. The company topped analyst estimates with a net income of $18.11 billion, a 58% increase over the first quarter of 2025. Compared with the fourth quarter, TSMC’s gross margin rose 3.9% thanks to cost-cutting measures, higher production-line utilization and favorable exchange rate changes.

For the full year, the company is projecting a more than 30% revenue increase. TSMC expects its capital expenditures, a line item that covers big purchases such as lithography machines, to be at the high end of the $52 billion to $56 billion range it provided in January.

Photo: TSMC