TSMC(US:TSM) Xinda Securities·2026-01-18 12:26Investment Rating - The industry investment rating is "Positive" [2] Core Insights - TSMC's revenue for Q4 2025 reached NT$1.046 trillion (US$33.73 billion), representing a year-on-year increase of 20.5% and a quarter-on-quarter increase of 5.7% [2][4] - The gross margin for Q4 2025 was 62.3%, up 3.3 percentage points year-on-year and 2.8 percentage points quarter-on-quarter [2][4] - TSMC expects a nearly 30% growth in sales for 2026, driven by strong customer demand, particularly in AI [2][3] - Capital expenditures (CapEx) for Q4 2025 were US$11.51 billion, with a full-year CapEx of US$40.9 billion for 2025, and a planned CapEx of US$52-56 billion for 2026 [2][3] - AI business revenue is projected to account for over 10% of total revenue, with a revised CAGR growth target of 55%-59% for AI revenue from 2024 to 2028 [2][3] - Advanced process technology remains dominant, with 77% of revenue coming from 7nm and below processes in Q4 2025 [2][3] - TSMC's global capacity planning includes multiple factories in Arizona, Japan, and Germany, with significant advancements in 2nm wafer production [3] Summary by Sections Financial Performance - Q4 2025 net income attributable to shareholders was NT$505.74 billion, a 35.0% increase year-on-year [4] - For the full year 2025, TSMC's revenue was US$122.42 billion, a 35.9% increase from 2024 [12] Capital Expenditure and Growth Plans - TSMC plans to significantly increase capital expenditures over the next three years to meet rising demand for AI chips [3] - The company aims to enhance production capacity to address the supply-demand gap in the AI sector [3] Market Demand and Product Segmentation - The revenue from high-performance computing (HPC) applications accounted for 55% of Q4 2025 revenue, with mobile applications contributing 32% [2][3] - TSMC's advanced process technology continues to lead the market, with a notable increase in the share of 3nm technology [2][3]