The AI era is an arms race, and Taiwan Semiconductor Manufacturing Company (TSMC) is the arsenal builder everyone depends on. The foundry has become the 6th most valuable company in the world, right behind Amazon. In Q3, the narrative was about conviction, and in Q4, that conviction translated into the largest capital expenditure plan in the company’s history: $52 billion to $56 billion for 2026 (up 30% year-over-year).
## TSMC’s Aggressive Bet on AI
TSMC’s CEO, C.C. Wei, highlighted the stakes when asked if the demand for AI chips is real. “If we don’t do it carefully, that’d be a big disaster.” The company is pulling the trigger on its massive capex plan because it has clear visibility on the demand for its chips. With 2nm production online and gross margins hitting new highs, TSMC is cementing its lead with hard assets.
## Apple’s Shift to Gemini
In a surprise move, Apple has selected Google’s Gemini to power the next generation of Siri. This multi-year partnership puts Google’s models and cloud infrastructure at the foundation of Apple’s AI features. Unlike the existing integration with OpenAI, this deal puts Gemini deep inside Siri’s operating logic. Apple has effectively decided that spending tens of billions on CapEx to train a frontier model from scratch isn’t the best use of its cash.
## Meta’s Compute Revolution
Meanwhile, Meta is going asset-heavy on a scale that is hard to comprehend. The company has established Meta Compute, a new top-level division dedicated to building its own AI chips. While Apple is outsourcing its AI brain to Google, Meta is taking a more hands-on approach to AI development. This strategic shift could have significant implications for the future of AI.
The AI era is an arms race, and TSMC is the arsenal builder everyone depends on. The foundry has become the 6th most valuable company in the world, right behind Amazon. In Q3, the narrative was about conviction, and in Q4, that conviction translated into the largest capital expenditure plan in the company’s history: $52 billion to $56 billion for 2026 (up 30% year-over-year). This massive capex plan is a testament to TSMC’s commitment to the AI market.
TSMC’s revenue rose 25% year-over-year to $33.7 billion, beating expectations. Gross margin expanded to 62%, underscoring the company’s significant pricing power as customers compete for limited capacity. Guidance implies acceleration, with management expecting revenue to grow by nearly 30% in 2026, significantly outpacing the broader industry forecast of 14%.
The $56 billion bet is a clear signal that TSMC has rock-solid customer checks for AI demand over the next 2-3 years. The company is allocating about 80% of its capex to advanced process technologies, including 3nm and 5nm manufacturing. While 3nm and 5nm are the current cash cows, TSMC confirmed that N2 (2nm) entered high-volume manufacturing in Q4 2025 with good yields.
High-Performance Computing (AI + 5G) now represents 55% of total revenue, widening the gap with Smartphones (32%). While consumer electronics face headwinds from a memory chip supply crunch, TSMC notes that high-end AI smartphones remain resilient. The company is doubling down on Arizona, with the Gigafab plan expanding to support an independent gigafab cluster.
The bubble verdict is that TSMC’s capex hike is a testament to its commitment to the AI market. CEO C.C. Wei noted that the company has rigorous verification with customers before spending billions on capex. The silicon supply remains the bottleneck for AI infrastructure, not power, and TSMC is working to close the gap between supply and demand.
In a separate development, Apple has selected Google’s Gemini to power the next generation of Siri. This multi-year partnership puts Google’s models and cloud infrastructure at the foundation of Apple’s AI features. Unlike the existing integration with OpenAI, this deal puts Gemini deep inside Siri’s operating logic. Apple has effectively decided that spending tens of billions on CapEx to train a frontier model from scratch isn’t the best use of its cash.
This is a classic ‘buy vs. build’ decision. By white-labeling Gemini, Apple is treating Google’s model like a component supplier, similar to how it buys screens from Samsung or camera sensors from Sony. Apple is betting that it doesn’t need to have the smartest model in the world at any given time. It just needs one that is reliable.
Meanwhile, Meta is going asset-heavy on a scale that is hard to comprehend. The company has established Meta Compute, a new top-level division dedicated to building its own AI chips. While Apple is outsourcing its AI brain to Google, Meta is taking a more hands-on approach to AI development. This strategic shift could have significant implications for the future of AI.
The future of AI is a complex and rapidly evolving landscape. TSMC is cementing its lead with hard assets, while Apple is outsourcing its AI brain to Google. Meta, on the other hand, is taking a more hands-on approach to AI development. As the AI era continues to unfold, one thing is clear: the future of AI will be shaped by the decisions of these tech giants.
