Is TSMC Winning the Global AI Chip Race?

Summary

Taiwan Semiconductor Manufacturing Company (TSMC) posted a record Q3 2025 profit — up 39% to NT$452.3 billion (about US$14.8 billion) — driven by surging demand for AI chips from customers such as Nvidia, Apple and AMD. The company raised its full-year revenue outlook to growth in the mid-30% range, highlighting the central role TSMC plays in the global AI supply chain.

TSMC is the dominant pure-play foundry: it produces chips for hundreds of clients and controls over 60% of the global foundry market, with an even larger share at cutting-edge nodes (3 nm and below). The firm is moving towards mass production of 2 nm by 2026, expects around US$42 billion capex in 2025, and is expanding fabs overseas (notably Arizona) to reduce geopolitical exposure.

Strong margins (reported gross margin ~59.5% and operating margin above 50%) and a shift to high-performance computing revenue underscore TSMC’s profitability and strategic importance. However, risks remain: US–China tensions, export controls on advanced equipment, and accelerating foundry efforts from Samsung and Intel could complicate the landscape.

In short: TSMC currently builds the chips that power the AI era, and its scale, technology leadership and deep client ties make it hard to displace — but geopolitics and competitor investment are meaningful threats.

Key Points

Q3 2025 profit surged 39% to NT$452.3 billion driven largely by AI-chip demand.
TSMC controls more than 60% of the global foundry market, with dominance at advanced nodes (3 nm and below).
Major customers include Nvidia, Apple and AMD — TSMC fabricates chips designed by others, making it central to the AI ecosystem.
Large capital investment: ~US$42 billion capex planned for 2025 to expand AI-related capacity, including an Arizona gigafab for 3 nm and 2 nm production.
Exceptional profitability (high gross and operating margins) reflects technological lead and pricing power.
Key risks: US–China geopolitical tension, export controls on equipment, and competitive push from Samsung and Intel.

Why should I read this?

If you care about who actually makes the hardware that runs AI — and why that matters for tech, investing and geopolitics — this is the quick briefing. TSMC isn’t just profitable; it’s the behind-the-scenes gatekeeper of the AI supply chain. Read this if you want the nutshell on why TSMC’s moves reshape markets and why global tensions could ripple through every AI data centre and gadget.