TSMC posts record quarter as Micron warns DRAM supply stays tight

Two of the chip industry's most important suppliers reported earnings this quarter. The numbers point the same way: the AI buildout is still eating capacity faster than anyone can add it.

Taiwan Semiconductor Manufacturing Company said on Thursday that net income reached NT$505.7 billion (about $16 billion) for the quarter, up 35 percent year over year and above analyst expectations, according to Ars Technica. Revenue came in at $33.7 billion, up 25.5 percent from the same period last year. TSMC expects revenue growth of nearly 30 percent in 2026 and plans to spend between $52 billion and $56 billion on capital expenditure this year, up from $40.9 billion in 2025.

On the call, CEO C.C. Wei told investors he had checked with cloud providers directly before signing off on the spending increase.

"I want to make sure that my customers' demand are real. So I talked to those cloud service providers, all of them," Wei said. "The answer is that I'm quite satisfied with the answer. Actually, they show me the evidence that the AI really helps their business."

Wei was blunter about the long-term picture, and less certain. "So another question is 'can the semiconductor industry be good for three, four, five years in a row?' I'll tell you the truth, I don't know. But I look at the AI, it looks like it's going to be like an endless, I mean, that for many years to come," he said, per Ars Technica.

That optimism sits against months of bubble talk. Google CEO Sundar Pichai warned in November of "irrationality" in the AI market. OpenAI's Sam Altman acknowledged in August that investors are "overexcited" and that "someone" will lose a "phenomenal amount of money."

TSMC makes chips for Apple, Nvidia, AMD and Qualcomm, so its order book works as a read on what those designers expect. The earnings landed the same day the US and Taiwan finalized a trade agreement that cuts tariffs on Taiwanese goods to 15 percent from 20 percent, with Taiwanese companies committing to $250 billion in direct US investment. TSMC is accelerating expansion at its Arizona fabs to match.

Memory is the harder constraint

The supply picture looks worse one layer down. Micron, in its first earnings call since killing off the Crucial consumer brand, reported record quarterly revenue of $13.64 billion, up nearly 57 percent year over year, and said DRAM shortages will persist beyond 2026, Tom's Hardware reported on 20 December.

CEO Sanjay Mehrotra said Micron expects to meet only "half to two-thirds" of demand from its key customers, even with new capacity coming. The company is building two fabs in Idaho, with the first due to produce chips in mid-2027, and plans to break ground on a New York fab in early 2026 with production around 2030.

HBM is part of the squeeze: it takes three times as much wafer space as DDR5, and Micron projects the HBM total addressable market will reach $100 billion by 2028, larger than the entire DRAM market in calendar 2024.

The knock-on for PC builders is price. DDR5 costs have surged, and suppliers disagree on when that stops. GPU vendor Sapphire says prices will stabilize within six to eight months; Kingston says they will "continue to go up."

Micron's own customers, Mehrotra said, are "concerned about long-term access to memory." That is a queuing problem, not a demand problem, which is roughly what TSMC is describing from the other end of the chain.