2330.TW

Taiwan Semiconductor Manufacturing Company Limited

Next est. report 2026-10-15 · BMO

AI '24: Manf & Foundries AI '24: Taiwan Phase 1 AI AI '25: Semis & MemoryMegaTech '25: Amazon Ecosystem

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Overview

Taiwan Semiconductor Manufacturing Company (TSMC) fabricates, assembles, and tests integrated circuits globally. It specializes in advanced CMOS wafer technique

Taiwan Semiconductor Manufacturing Company (TSMC) fabricates, assembles, and tests integrated circuits globally. It specializes in advanced CMOS wafer techniques for logic, mixed-signal, and memory solutions. High-Performance Computing (66%) and Smartphones (22%) dominate revenue, driven by strong AI demand from cloud service providers. TSMC's components are crucial for mobile, HPC, automotive, and IoT applications.

What They Do (Plain English & Analogies): Taiwan Semiconductor Manufacturing Company (TSMC) is like a highly specialized, advanced factory that makes the tiny electronic brains, or chips, for almost all modern electronic devices. Instead of designing their own chips, they take the blueprints from other companies (like Apple or Nvidia) and turn them into physical chips using incredibly precise manufacturing processes. They handle everything from making the raw silicon wafers into circuits, to putting them together and testing them, before sending them out to be used in smartphones, computers, cars, and even advanced Artificial Intelligence systems. They are the 'foundry' that builds the foundational components that power our digital world.
Very Brief History: Founded in 1987 by Dr. Morris Chang, Taiwan Semiconductor Manufacturing Company Limited (TSMC) pioneered the dedicated foundry business model, revolutionizing the semiconductor industry by focusing solely on manufacturing chips for other companies. Headquartered in Hsinchu City, Taiwan, TSMC has since grown to become the world's largest independent semiconductor foundry, driving technological progress and becoming an indispensable part of the global technology ecosystem.
"Street Stereotype": TSMC is widely perceived as the undisputed leader and the 'Switzerland' of the semiconductor foundry industry. It's seen as a neutral, highly trusted, and technologically superior partner for chip designers worldwide, especially for leading-edge technologies. The 'street' acknowledges its critical role in powering the AI revolution and its immense capital expenditure to maintain its dominance, despite geopolitical risks and the sheer scale of investment required.
Subsidiaries On Linked In*: TSMC Nanjing Company Limited — Wholly owned subsidiary in mainland China
WaferTech — Wholly owned subsidiary in the United States
TSMC China Company Limited — Wholly owned subsidiary in mainland China
TSMC Arizona — Significant manufacturing and R&D operation in the United States
JASM (Japan Advanced Semiconductor Manufacturing) — Joint venture in Japan, focused on mature nodes for specific applications like CMOS image sensors
ESMC (European Semiconductor Manufacturing Company) — Joint venture in Germany, focused on mature nodes for automotive and industrial applications
Customer Sectors & Example Clients: TSMC's customers span a wide range of sectors, including high-performance computing (HPC), smartphones, Internet of Things (IoT), automotive electronics, and data center equipment (DCE). The company is a critical supplier for the rapidly expanding AI market, serving cloud service providers and CPU customers. While specific customer names are not always disclosed in earnings transcripts, major clients are known to include industry giants like Apple and Nvidia. Other likely top clients based on their market position and reliance on advanced chip manufacturing include Qualcomm, AMD, and potentially Intel for some of its foundry services.
New Customers / Segments They'Re Targeting: TSMC is actively targeting and benefiting from the 'newly emerging agentic AI market' and the broader AI megatrend, which is driving robust demand for leading-edge silicon. This includes a resurgence in the role of CPUs in AI data centers, where TSMC collaborates closely with its CPU customers across various architectures (x86, Arm-based, RISC-V). They are also focusing on higher value-added segments within mature nodes, such as power management ICs and CMOS image sensors, particularly for automotive and industrial applications.
Supply Chain And Sourcing Geographies: TSMC's supply chain involves close collaboration with tool suppliers globally. The company's primary manufacturing hub is in Taiwan, where it operates multiple GIGAFAB® fabs. Significant capacity expansion is underway in the United States, specifically in Arizona, where TSMC is building several advanced semiconductor logic wafer fabs and advanced packaging fabs. Other key manufacturing locations include Japan, with JASM Fab 1 focusing on CMOS image sensors, and Germany, with ESMC targeting automotive and industrial applications. These overseas fabs are part of a strategy to address structural increases in demand and strengthen the global supply chain.
Sales Geographies And Expansion Plans: TSMC currently sells its products globally, with a significant presence across Taiwan, mainland China, Japan, the United States, Europe, the Middle East, and Africa. The company is actively expanding its manufacturing footprint to support sales and customer growth in key regions. This includes substantial investments in Arizona, USA, to build multiple advanced fabs for 2nm and below technologies, as well as advanced packaging facilities. Additionally, TSMC is expanding its capacity in Japan with JASM Fab 1 and in Germany with ESMC, specifically targeting mature nodes for automotive and industrial applications. The company is also building 13 leading-edge and advanced packaging fabs in Taiwan over the next several years.
How Key Themes May Help/Hurt: The 'AI '25: Semis & Memory' theme is overwhelmingly bullish for TSMC. The unprecedented and accelerating demand for High Bandwidth Memory (HBM) and broadening AI applications, including agentic AI, AI PCs, and edge AI, directly drives demand for TSMC's advanced semiconductors and packaging solutions. As the leading foundry for AI chips, TSMC benefits from the continuous need for more computation and leading-edge silicon. However, the theme also highlights potential risks. Massive capital intensity for new fab construction and equipment, persistent supply chain constraints (especially in advanced packaging like CoWoS), and geopolitical tensions, particularly involving Taiwan, could hurt TSMC by increasing costs, limiting production, or disrupting global supply chains.

3 Main Long-Term Bull Details

Unrivaled Technology Leadership and Roadmap: TSMC continues to push the boundaries of semiconductor technology with its 2nm process ramping steeply, and a robust roadmap extending to A14, A13, and A12 technologies, which are expected to be long-lasting nodes with significant performance, power, and density gains. This leadership ensures they capture the most advanced and high-value chip designs.
Dominant Position in the AI Megatrend: The company is the primary beneficiary of the multi-year AI megatrend, including the emergence of agentic AI and the increasing role of CPUs in AI data centers. This structural demand drives robust growth for their leading-edge process technologies and advanced packaging solutions.
Aggressive Capacity Expansion and Customer Collaboration: TSMC is undertaking massive capital expenditures, including an additional $100 billion investment in Arizona, to build numerous advanced fabs globally. This expansion, driven by strong customer demand and deep collaboration, ensures they can support future growth and maintain their market share.

3 Main Long-Term Bear Details

Massive Capital Intensity and Execution Risks: The company faces significant capital intensity, with a raised 2026 capital budget of $60 billion to $64 billion, and even higher CapEx expected in the coming years. The construction and ramp-up of numerous greenfield fabs globally, particularly overseas, involve substantial startup costs and execution risks, which can dilute gross margins in the early stages.
Geopolitical Tensions and Supply Chain Concentration: The concentration of advanced semiconductor manufacturing in Taiwan creates a critical systemic risk due to geopolitical tensions in the Taiwan Strait. Any disruption could severely impact global AI development and supply chains, a concern explicitly highlighted by industry leaders.
Persistent Supply Chain Bottlenecks and Cost Pressures: Despite aggressive expansion, persistent supply chain bottlenecks, particularly in advanced packaging technologies like CoWoS, are limiting customer growth. Rising input costs, including equipment inflation, also pose a challenge to profitability, as the company balances pricing strategies with customer success.

Competitors And Differentiation: TSMC's primary competitors in the foundry space include Samsung Foundry and Intel. TSMC differentiates itself through its unparalleled technology leadership, manufacturing excellence, and deep customer trust. The company emphasizes that there are 'no shortcuts' in developing leading-edge semiconductor technology, which takes five to seven years to develop and ramp to high-volume production. TSMC's strategy involves continuous technological enhancement, such as the A14, A13, and A12 process technologies, and a disciplined capacity planning system based on strong customer collaboration and multi-year product roadmaps. They position themselves as a trusted technology partner, not just a manufacturer, ensuring customer success without 'squeezing them out from the market'.
Recent Performance & What The Market'S Focused On: TSMC concluded its second quarter of 2026 with revenue of $40.2 billion, at the high end of its guidance, driven by strong demand for leading-edge process technologies. The company provided strong guidance for the third quarter of 2026, expecting revenue between $44.6 billion and $45.8 billion, representing a 12% sequential increase or a 37% year-over-year increase at the midpoint. Full-year 2026 revenue growth is now expected to be slightly above 40% year-over-year. TSMC also raised its full-year 2026 capital budget to between $60 billion and $64 billion. The market is primarily focused on the continued robust demand from the AI megatrend, the steep ramp-up of 2nm technology, the impact of overseas fab expansion on gross margins, and the company's ability to address advanced packaging capacity shortages.

Revenue Segments And Estimated Mix: High-Performance Computing (HPC) — Mix: 66%; Source: Q2 2026 earnings transcript; Trend: Increased 20% quarter-over-quarter
Smartphone — Mix: 22%; Source: Q2 2026 earnings transcript; Trend: Decreased 4% quarter-over-quarter
IoT — Mix: 5%; Source: Q2 2026 earnings transcript; Trend: Increased 4% quarter-over-quarter
Automotive — Mix: 4%; Source: Q2 2026 earnings transcript; Trend: Increased 15% quarter-over-quarter
DCE (Data Center Equipment) — Mix: 1%; Source: Q2 2026 earnings transcript; Trend: Increased 5% quarter-over-quarter
Advanced Technology (7nm and below) — Mix: 77% of wafer revenue; Source: Q2 2026 earnings transcript; Trend: n/m
2 nm process technology — Mix: 3% of wafer revenue; Source: Q2 2026 earnings transcript; Trend: n/m
3 nm process technology — Mix: 30% of wafer revenue; Source: Q2 2026 earnings transcript; Trend: n/m
5 nm process technology — Mix: 33% of wafer revenue; Source: Q2 2026 earnings transcript; Trend: n/m
7 nm process technology — Mix: 11% of wafer revenue; Source: Q2 2026 earnings transcript; Trend: n/m
Product Brands: 2 nm process technology
3 nm process technology
5 nm process technology
7 nm process technology
A14 process technology
A13 process technology
A12 process technology
CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging
COUPE (Chip-on-Wafer-on-Package) advanced packaging

Bull / Bear Details

TSMC (2330.TW) remains a strongly bullish investment as of 2026-07-17, driven by an accelerating, multi-year AI megatrend and unprecedented demand for leading-e

Thesis

TSMC (2330.TW) remains a strongly bullish investment as of 2026-07-17, driven by an accelerating, multi-year AI megatrend and unprecedented demand for leading-edge process technologies, including the emerging agentic AI market. The company is aggressively expanding capacity with significantly increased CapEx and maintaining technology leadership (2nm, A14 family), despite near-term gross margin dilution from new technology ramps and overseas fab expansion.

Bull case

The multi-year AI megatrend is extremely robust, driving unprecedented demand for leading-edge process technologies. TSMC raised its full-year 2026 revenue growth forecast to slightly above 40% year-over-year and expects Q3 revenue to increase 37% year-over-year at the midpoint. The emergence of agentic AI is further boosting CPU demand, benefiting TSMC as most CPU customers utilize its advanced nodes.
TSMC significantly increased its full-year 2026 capital budget to $60-$64 billion and announced an additional $100 billion investment in Arizona for new 2nm and below fabs, alongside 13 new fabs in Taiwan. This aggressive expansion, coupled with the A14 technology family (A14, A13, A12) extending leadership well into the future, ensures TSMC can capture strong, long-term AI-driven growth.
TSMC's indispensable role in the global semiconductor supply chain, underpinned by its technology, manufacturing excellence, and deep customer trust, provides significant competitive advantage. The company's strong collaboration with customers and their customers (CSPs) provides clear multi-year demand signals, de-risking massive CapEx and ensuring sustained business growth in the "new AI industry."

Bear case

Near-term profitability faces headwinds from the steep ramp-up of 2nm technology, expected to dilute gross margin by 3-4 percentage points in H2 2026. Additionally, overseas fab expansion will dilute gross margin by 2-3% in early stages and 3-4% in later stages over several years, impacting overall profitability despite strong demand.
The significantly increased capital expenditure, including the additional $100 billion in Arizona, presents substantial capital intensity and execution risks. While necessary for growth, these greenfield fabs incur significant startup costs and require flawless execution amidst potential supply chain bottlenecks for critical materials and advanced packaging capacity, which is currently limiting customer growth.
Competition from well-funded rivals like Samsung and Intel, who are actively engaging TSMC's customers and receiving government support, poses a long-term threat. Furthermore, macroeconomic uncertainties and rising component prices are challenging consumer and price-sensitive end markets, potentially impacting overall demand beyond the robust AI segment.

Bull / Bear Case

Bear Case: Near-term profitability faces significant headwinds from the steep ramp-up of 2nm technology, which is expected to dilute gross margin by 3-4 percentage points in the second half of 2026. Additionally, overseas fab expansion will dilute gross margin by 2-4% over several years. The substantially increased capital expenditure, including the additional $100 billion in Arizona, presents considerable capital intensity and execution risks, with greenfield fabs incurring high startup costs. Persistent supply chain bottlenecks, particularly in advanced packaging (CoWoS), are currently limiting customer growth. Competition from well-funded rivals like Samsung and Intel, who are actively engaging TSMC's customers and receiving government support, poses a long-term threat. Macroeconomic uncertainties and rising component prices also challenge consumer and price-sensitive end markets, potentially impacting overall demand beyond the robust AI segment.
Bull Case: TSMC is positioned for robust, multi-year growth, primarily driven by the accelerating AI megatrend, including the emerging agentic AI market, which is fueling unprecedented demand for leading-edge process technologies. The company has raised its full-year 2026 revenue growth forecast to slightly above 40% year-over-year and anticipates a strong 37% year-over-year increase in Q3 revenue. TSMC is aggressively expanding its capacity, with a significantly increased 2026 capital budget of $60-$64 billion, including an additional $100 billion investment in Arizona and 13 new fabs in Taiwan. Its continuous technology leadership, extending to the A14 family, ensures it captures the most advanced and high-value chip designs. Strong customer collaboration and its indispensable role in the global semiconductor supply chain further solidify its competitive advantage and de-risk massive capital expenditures.
More Compelling & Why: Bear. Despite strong fundamentals and analyst upgrades, TSMC's current P/E ratio (TTM) of 29.04x to 36.49x is significantly above its 5-year median of 22.78x, and its FCF yield (1.54%-1.89%) is below historical averages, indicating a stretched valuation. The strongest bear argument is the significant overvaluation combined with near-term gross margin dilution from new technology ramps and overseas fab expansion. My view would flip to bullish if the P/E ratio normalized closer to its historical median, reflecting a more reasonable entry point for investors.

Key Factors5 rows

Key Factor	Why It Matters	What To Watch	What It Signals	Where/How To Track	Free Alt Data	Paid Alt Data
TSMC's Third Quarter 2026 Revenue Guidance	This guidance provides a direct, near-term indication of TSMC's business momentum and customer demand for its advanced process technologies, especially given the strong AI tailwinds. It reflects the company's current operational performance and market outlook.	Revenue between $44.6 billion and $45.8 billion, representing a 12% sequential increase or a 37% year-over-year increase at the midpoint.	Revenue at or above the midpoint ($45.2 billion) signals strong demand and execution (bullish). Revenue below the midpoint or any downward revision would be a bearish signal.	TSMC's official earnings release and subsequent investor calls for Q3 2026 results (expected October 2026).	Industry analyst reports from firms like TrendForce or IDC on semiconductor market forecasts.	Bloomberg Terminal: TSMC consensus estimates; S&P Capital IQ: Revenue forecasts.
Advanced Packaging (CoWoS) Capacity Constraints	TSMC's advanced packaging capacity is currently limiting customer growth, indicating a critical bottleneck in the AI supply chain. Addressing this constraint is vital for unlocking further revenue from leading-edge wafers and supporting customer success.	Management commentary on efforts to shorten the gap between demand and capacity for advanced packaging. Any announcements of new advanced packaging fabs or increased CapEx allocation specifically for packaging.	Announcements of significant capacity expansion for advanced packaging (e.g., new fabs, increased CapEx allocation for advanced packaging beyond 10-20% of total) would be bullish. Continued severe shortages without clear resolution plans would be a bearish signal.	TSMC's future earnings calls, investor conferences (e.g., SEMICON West 2026, October 13-15, 2026), and company press releases.	Reddit (r/semiconductors) and other tech forums for discussions on OSAT (Outsourced Semiconductor Assembly and Test) supply chain issues.	Yole Développement: Advanced Packaging Market Forecasts; TrendForce: HBM Shipment Volumes and Market Share.
High-Performance Computing (HPC) Revenue Contribution and Agentic AI Acceleration	HPC, driven by AI, is the largest and fastest-growing platform for TSMC. The emergence of agentic AI further boosts CPU demand, reinforcing the multi-year AI megatrend and TSMC's central role in this critical market.	HPC revenue contribution (66% in Q2 2026, increased 20% QoQ) and any specific updates on agentic AI-driven CPU demand or related design wins.	Continued growth in HPC revenue contribution (e.g., above 66%) and positive commentary on agentic AI adoption or CPU demand would be bullish. A slowdown in HPC growth or negative outlook on AI-driven CPU demand would be a bearish signal.	TSMC's quarterly earnings reports and conference calls. Industry reports on AI chip revenue growth and global server shipments.	Google Trends: 'agentic AI' search volume; Company earnings reports of major cloud service providers (CSPs) for their CapEx and AI infrastructure plans.	IDC/Gartner: AI-Specific Semiconductor Revenue Growth; Mercury Research: Server CPU Market Share.
Revision of Full Year 2026 Capital Expenditure (CapEx) to $60B-$64B	A significant increase in CapEx signals management's strong conviction in future growth opportunities, particularly from the multi-year AI megatrend, and their commitment to support customer demand for advanced technologies.	The revised range of $60 billion to $64 billion for 2026 CapEx, with 70-80% allocated for advanced process technologies.	CapEx at the high end of the revised range or further upward revisions would be bullish, indicating even stronger demand and confidence. Any downward revision would be a bearish signal.	Future TSMC earnings calls and investor presentations (e.g., Q3 2026 earnings call in October 2026, Q4 2026 earnings call in January 2027).	SEMI Industry Association: Worldwide Semiconductor Manufacturing Equipment Billings (Book-to-Bill Ratio).	Gartner: Semiconductor Capital Spending Forecasts; VLSIresearch: Equipment Spending Forecasts.
Gross Margin Dilution from 2nm Technology Ramp-up	The ramp-up of new, advanced process technologies like 2nm is crucial for TSMC's long-term leadership. Monitoring the associated gross margin dilution indicates the efficiency of execution and cost control during this critical transition.	Third-quarter gross margin expected to decrease by 1.7 percentage points to 66% at the midpoint, with 2nm dilution contributing about 3-4 percentage points.	Gross margin at or above 66% despite the 2nm ramp, or a lower-than-expected dilution percentage, would be bullish. Gross margin significantly below 66% or higher dilution would be a bearish signal.	TSMC's Q3 2026 earnings release and conference call (expected October 2026).	Industry news and analyst reports focusing on advanced node manufacturing yields and cost structures.	TechInsights: Process Technology Cost Analysis; Susquehanna Financial Group: Semiconductor Manufacturing Cost Models.

Key Reported Metrics, Reratings Triggers & Results3 rows

High-Performance Computing (HPC) is TSMC's largest and fastest-growing revenue platform, predominantly driven by robust AI demand. Its continued strong growth i

Key reported metrics
Metric	Last period	Why it matters
HPC Revenue Growth	47.4%	High-Performance Computing (HPC) is TSMC's largest and fastest-growing revenue platform, predominantly driven by robust AI demand. Its continued strong growth is key to TSMC's overall revenue expansion and market leadership.
Gross Margin	15.5%	Gross Margin is crucial for profitability, especially as TSMC ramps up new, costly technologies like 2nm and expands overseas fabs, which are expected to dilute margins. Its performance indicates operational efficiency and pricing power.
Total Revenue	33.7%	Total Revenue is a primary indicator of TSMC's overall business health and market demand, reflecting its ability to capture the strong demand for advanced semiconductors, particularly from the AI megatrend.

Key Questions

Will TSMC meet its significantly raised full-year 2026 revenue guidance of slightly above 40% year-over-year and its Q3 2026 revenue outlook, driven by the acce

Will TSMC meet its significantly raised full-year 2026 revenue guidance of slightly above 40% year-over-year and its Q3 2026 revenue outlook, driven by the accelerating AI megatrend and agentic AI demand?

Question 2: Can TSMC effectively mitigate the expected gross margin dilution of 3-4 percentage points from the steep 2nm technology ramp-up and the 2-4% dilution from overseas fab expansion, while maintaining overall profitability in the next quarter?
Question 3: Will TSMC successfully alleviate its tight advanced packaging capacity constraints and effectively manage competitive pressures from other foundries and advanced packaging solutions to support its customers' growth?

Earnings Transcript SummaryTable

2026-07-16 · 2026Q2 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
1. Capturing AI-driven demand and leading-edge technology leadership: Management consistently highlighted the "extremely robust" AI-related demand, the multi-year AI megatrend, and the acceleration of agentic AI as key drivers for their business. They emphasized their strong technology leadership, particularly with 2nm and the upcoming A14 family, to support this demand. 2. Aggressive capacity expansion and CapEx investment: TSMC raised its full-year 2026 capital budget to between $60 billion and $64 billion, citing strong structural demand. They announced an additional $100 billion investment in Arizona for several more fabs (2nm and below, advanced packaging) and are building 13 leading-edge and advanced packaging fabs in Taiwan. 3. Maintaining profitability amidst expansion and new technology ramps: Management discussed the expected gross margin dilution from the steep ramp-up of 2nm technology (3-4 percentage points) and overseas fabs (2-4 percentage points in early to latter stages). However, they expressed commitment to delivering profitable growth through strong demand for leading-edge technologies, cost improvement efforts, and capacity optimization.	The overall takeaway of the call is highly positive and bullish, driven by unprecedented and accelerating demand for AI-related semiconductors. Management expressed strong conviction in the multi-year AI megatrend, leading to a significant increase in the 2026 capital budget and ambitious capacity expansion plans globally, including a substantial new investment in Arizona. While acknowledging some gross margin dilution from new technology ramps and overseas fabs, the company remains committed to profitable growth. The tone was confident and optimistic, with management emphasizing their technology leadership, customer trust, and strategic importance in the evolving AI industry.	For the first quarter of 2026 (prior quarter), TSMC reported the following quarter-over-quarter (QoQ) growth for its revenue platforms: HPC: increased 20% QoQ, accounting for 61% of revenue. Smartphone: decreased 11% QoQ, accounting for 26% of revenue. IoT: increased 12% QoQ, accounting for 6% of revenue. Automotive: decreased 7% QoQ, accounting for 4% of revenue. DCE: increased 28% QoQ, accounting for 1% of revenue. (Note: Year-over-year growth for individual revenue segments was not explicitly stated in the transcript or found in the provided search results for Q1 2026.)	1. CapEx outlook beyond 2026 and Arizona investment schedule: Analysts inquired about a three-year CapEx guidance and the timeline for the additional $100 billion investment in Arizona. Management stated they do not have a specific number for a three-year guidance but emphasized that CapEx in the next three years will be "even more significantly higher than the past three years" due to strong AI megatrend conviction. For Arizona, the schedule depends on market situation and customer demand, but they plan for "additional four more fabs" (front and back-end) and are trying to speed it up. 2. Foundry competition (Samsung, Intel) and customer engagement with competitors: Analysts asked about competitive threats from Samsung's memory profits and Intel's U.S. government support, and reports of customers engaging with competitors. C.C. Wei responded by emphasizing that there are "no shortcuts" in the semiconductor industry, highlighting the importance of technology, manufacturing, and customer trust. He stated that choosing a technology partner is a long-term commitment, "not buying a milk from 7-Eleven." 3. Advanced packaging competition (e.g., EMIB-T) and its impact on TSMC's front-end business: Analysts questioned if competing advanced packaging technologies like EMIB-T gaining traction would cannibalize TSMC's value-add or serve as an entryway for competitors into front-end wafer business. C.C. Wei welcomed additional flexibility in the market, stating that TSMC's packaging capacity is tight and competitors' success in advanced packaging would help TSMC's front-end wafer business by enabling customers to get their wafers packaged. He reiterated that front-end and back-end businesses are different.	For the second quarter of 2026, TSMC reported the following quarter-over-quarter (QoQ) growth for its revenue platforms: HPC: increased 20% QoQ, accounting for 66% of revenue. Smartphone: decreased 4% QoQ, accounting for 22% of revenue. IoT: increased 4% QoQ, accounting for 5% of revenue. Automotive: increased 15% QoQ, accounting for 4% of revenue. DCE: increased 5% QoQ, accounting for 1% of revenue. (Note: Year-over-year growth for individual revenue segments was not explicitly stated in the transcript or found in the provided search results for Q2 2026.)

Transcript TidbitsTable

2026-07-16

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Broader Themes Emerging	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)	Hiring
TSMC noted the emergence of the 'agentic AI market' is leading to a resurgence in the role of CPUs in AI data centers, driving more silicon demand in addition to AI accelerators. They highlighted that regardless of the CPU architecture (x86, Arm-based, or RISC-V), almost all are TSMC's customers, which is positive for the company. The company is also increasing mature node capacity in Japan for CMOS image sensors and in Germany for automotive and industrial applications. The A14 technology is designed to address the incessant need for high-performance and energy-efficient computing, with strong customer interest from both smartphone and HPC AI applications.	TSMC acknowledged competition from a South Korean competitor making significant profits and a U.S. competitor with strong government support. However, TSMC emphasized that there are 'no shortcuts' in the semiconductor industry, and success relies on technology, manufacturing, and customer trust. Regarding advanced packaging, TSMC stated that its packaging capacity is currently tight and limiting customer growth, so they welcome additional flexibility in the market from competitors like those offering EMIB-T, as it helps TSMC's front-end wafer business. They clarified that front-end wafer business and back-end packaging business are distinct, and competition in one does not automatically translate to the other.	The company observes that consumer and price-sensitive end market segments are challenged by rising component prices and macroeconomic uncertainties. However, AI-related demand remains extremely robust, with the AI megatrend driving the need for more computation and supporting strong demand for leading-edge silicon. TSMC believes the industry is witnessing a 'new industry called AI industry,' which will impact automotive, humanoids, robotics, and all other industries. While AI-related mature nodes like power management ICs and sensors are in shortage, demand for other commodity mature nodes is not as strong.	TSMC expects third-quarter revenue to be between $44.6 billion and $45.8 billion, representing a 12% sequential increase or a 37% year-over-year increase at the midpoint. The third-quarter gross margin is expected to decrease to 66% at the midpoint, primarily due to a 3-4 percentage point dilution from the steep ramp-up of 2 nm technology. Gross margin dilution from overseas fabs is forecasted to be 2-3% in early stages and widen to 3-4% in later stages over the next several years. The full-year 2026 capital budget has been raised to between $60 billion and $64 billion, with 70-80% allocated to advanced process technologies. TSMC anticipates continued and increasing cash dividends per share in 2027. Full-year 2026 revenue growth is projected to be slightly above 40% year-over-year. An additional $100 billion investment in Arizona for several more 2 nm and below logical wafer fabs and advanced packaging fabs was announced, alongside building 13 leading-edge and advanced packaging fabs in Taiwan. A14 technology pre-production is set for 2027 and volume production for 2028, with A13 and A12 scheduled for volume production in 2029. TSMC expects CapEx in the next three years to be 'even more significantly higher than the past three years' and anticipates 'a very good business for TSMC' in the next few years.	Semis	The transcript suggests the emergence of a 'new industry called AI industry,' which is becoming common in daily life and will affect automotive, humanoids, robotics, and all other industries.	AI related demand continues to be extremely robust. Our conviction in the multi-year AI megatrend remains very high. full year 2026 revenue growth to be slightly above 40% year-over-year in U.S. dollar terms. The CapEx in the next three years will be even more significantly higher than the past three years. The trend is so robust that I believe we are witnessing a kind of a new industry. Next few years is going to be a very good business for TSMC. AI's CAGR... it's stronger and stronger.	consumer and the price-sensitive end market segment are being challenged due to the impact of rising component prices and macroeconomic uncertainties. We expect the steep ramp-up of our 2 nm technology to dilute our gross margin by about 3 percentage points-4 percentage points. gross margin dilution from the ramp-up of overseas fabs in the next several years to be 2%-3% in the early stages and widen to 3%-4% in the latter stages. Our packaging capacity is so tight that now it's limiting my customers' growth. You put all the truths together, it's not the truth. I'm really jealous about memory companies, 86% gross margin.	TSMC stated that its additional $100 billion investment in Arizona will 'help to further foster the development of the U.S. semiconductor ecosystem, strengthen the supply chain, and support an increasing number of high-tech, high-paying jobs in the United States.'