main producer of advanced artificial intelligence (AI) chips and a major Nvidia supplier, pledged to invest a further US$100 billion (RM407.2 billion) in the American state of Arizona in a win for United States (US) President Donald Trump, who has pushed for more chipmaking at home.
Reinforcing its bullish view of AI demand, the company raised its forecast for capital spending by up to 14 per cent this year.
"Our customers and customers', who are mainly the cloud service providers, continue to provide us with their very strong signal and positive outlook.
"Thus, our conviction in the multi-year AI megatrend remains very high," TSMC's chief executive officer Che-Chia Wei told an earnings conference.
The upbeat outlook came after TSMC, a bellwether for AI chip demand, posted a 77 per cent jump in second-quarter profit to a record high of NT$706.6 billion (RM89.31 billion), beating a market forecast of NT$632.6 billion (RM79.96 billion) and marking its ninth straight quarter of double-digit percentage growth.
Capital expenditure for 2026, a key indicator of management's confidence in the durability of AI demand, is forecast to be between US$60 billion (RM244.3 billion) and US$64 billion (RM260.6 billion), compared with previous guidance of the high end of between US$52 billion (RM211.7 billion) and US$56 billion (RM228 billion).
The company added that its capital spending in the next three years will be "even more significantly higher" than in the past three years.
Thriving on surging demand for advanced chips used in AI applications, TSMC's further US$100 billion investment in Arizona would add to the already announced US$165 billion (RM671.9 billion) to build chip factories there.
The investment comes amid Trump's repeated accusation that Taiwan is stealing American semiconductor business. He has said that by the time he leaves office, the US will have 50 per cent of the world's semiconductor manufacturing capacity.
"We believe this investment will help to further foster the development of the US semiconductor ecosystem, strengthen the supply chain, and support an increasing number of high-tech, high-paying jobs in the United States," Wei said.
He noted that an additional four plants would probably be built in Arizona, including one for advanced packaging, bringing the total to eight already being built or planned, though the timeline for the additional ones would depend on the "market situation".
In a separate announcement on Thursday, the US Commerce Department said TSMC's additional investment "highlights the Trump Administration’s commitment to strengthening domestic manufacturing and US technological leadership through strategic partnerships and investment."
The Economist Intelligence Unit's principal economist for Asia and lead for global trade Nick Marro said that the investment will help anchor the reciprocal trade agreement signed between the US and Taiwan earlier this year, which cut US tariffs and saw Taiwan pledge to increase investment.
The company's aggressive capital spending and soaring profit margins have made it a barometer of demand in the global semiconductor industry.
The company expects full-year revenue in US dollar terms to increase by slightly more than 40 per cent in 2026, up from a previous forecast of more than 30 per cent. For the current quarter, it forecasts sales between US$44.6 billion (RM181.6 billion) and US$45.8 billion (RM186.5 billion), up from US$33.1 billion (RM134.8 billion) a year earlier.
Wei observed all of TSMC's customers were "very aggressive" in their demand forecasts, but added that simply adding up their projections would overstate actual market demand.
"I believe they try their best to tell me the truth," he said, noting that TSMC also conducts its own analysis of AI data centre construction and broader demand trends before deciding on capacity expansion, to avoid building chips that end up in inventory.
In the AI market, Wei said the emergence of agentic AI is leading to a resurgence of the role of CPUs in AI data centres, driving additional silicon demand beyond AI chip consumption.
Analysts said demand for TSMC's 3-nanometre and 2-nanometre process technologies for AI chips, as well as for its advanced chip packaging technology, CoWoS, remains strong.
That has catapulted Asia's most valuable company, also a key supplier to Apple, to new heights. Its market capitalisation is now nearly double that of South Korean rival Samsung Electronics at around US$1.97 trillion (RM8.02 trillion).
On Monday, the company announced a 36 per cent rise in second-quarter revenue, ahead of market forecasts and a record high.
In related news, on Wednesday, Dutch company ASML, the world's dominant supplier of equipment needed to make high-tech computer chips, raised its 2026 sales forecasts and pledged a capacity boost that may ease fears a production bottleneck could slow the AI boom.
Wei said that TSMC works closely with ASML, and whether it adopts the company's next-generation equipment will depend on when it demonstrates sufficient technological capability in manufacturing and cost effectiveness.
TSMC's Taipei-listed shares have gained 59 per cent so far this year, largely in line with the broader market.
