Taiwan Semiconductor Manufacturing Company Limited

TSMC reported second-quarter 2026 revenue of $40.2 billion in U.S. dollar terms, at the high end of guidance. Second-quarter gross margin was 67.7%, up 150 basis points sequentially; operating margin was not stated for the quarter, but Q3 guidance calls for 56%-58%. Technology mix showed 2 nm at 3% of wafer revenue, 3 nm at 30%, 5 nm at 33%, and 7 nm at 11%, with advanced technologies (7 nm and below) at 77% of wafer revenue. Platform mix had HPC at 66% of revenue, smartphone at 22%, IoT at 5%, automotive at 4%, and DCE at 1%. Cash and marketable securities were TWD 3.5 trillion ($110 billion), cash balance was TWD 3.1 trillion, cash from operations was TWD 783 billion, CapEx was TWD 496 billion ($15.7 billion), and cash dividends paid were TWD 156 billion. For Q3 2026, revenue is expected to be $44.6 billion-$45.8 billion, gross margin 65%-67% (about 66% midpoint), and operating margin 56%-58%. Full-year 2026 revenue is expected to grow slightly above 40% year over year in U.S. dollar terms, and full-year 2026 CapEx is now planned at $60 billion-$64 billion. Management said the 2 nm ramp should dilute gross margin by about 3%-4% in the second half, and overseas fabs are expected to dilute gross margin by 2%-3% in the early stages, widening to 3%-4% later.

C.C. Wei emphasized that demand for leading-edge technologies is very strong, especially from AI customers and cloud service providers, and said TSMC’s conviction in the multi-year AI megatrend remains very high. He framed the additional $100 billion Arizona investment as a response to strong multi-year demand, while also saying TSMC is continuing to build 13 leading-edge and advanced packaging fabs in Taiwan. His tone was confident but practical: he said consumer and price-sensitive segments are weaker, so TSMC is being prudent in planning while focusing on technology leadership and capacity execution.

Wendell Huang highlighted the quarter’s profitability and balance sheet, noting second-quarter gross margin of 67.7%, up 150 bps sequentially, helped by cost improvement and higher capacity utilization, partly offset by overseas fab dilution. He said third-quarter gross margin is expected to ease to about 66% at the midpoint because the steep 2 nm ramp should dilute margin by about 3%-4%, though that should be partly offset by leading-edge demand and ongoing productivity gains. He also detailed cash generation of TWD 783 billion from operations, CapEx of TWD 496 billion, and ending cash and marketable securities of TWD 3.5 trillion ($110 billion), while reiterating that 2026 CapEx is being raised to $60 billion-$64 billion, with most of it going to advanced process technologies and a commitment to continued dividend growth.

Analysts focused heavily on CapEx, the pace of capacity expansion, and whether TSMC would provide a longer-term CapEx or revenue roadmap; management declined to give multi-year numeric guidance but said spending will keep rising as long as business opportunities remain strong. Questions also probed competition from Samsung, Intel, and advanced packaging rivals; C.C. Wei responded that technology, manufacturing, and customer trust are the real moat, and welcomed some competitive alternatives in packaging because TSMC’s back-end capacity is tight. On AI, management said demand is broader than a single accelerator architecture, includes CPUs as agentic AI grows, and remains strong enough that they expect the gap between demand and supply to stay very large through at least the late 2020s.