Taiwan Semiconductor Manufacturing Company (NYSE: TSM) raised its full-year revenue forecast after reporting record second-quarter revenue and profit, supported by strong demand for advanced chips used in artificial intelligence and high-performance computing.
TSMC now expects its 2026 revenue to increase slightly more than 40% in U.S. dollar terms. The company had previously forecast growth of more than 30%.
The stronger outlook was accompanied by a higher capital-spending plan and an additional $100 billion commitment to expand TSMC’s semiconductor manufacturing operations in Arizona.
Despite the improved results and guidance, TSMC shares remained volatile as investors weighed the company’s higher spending plans, third-quarter margin outlook and a broader sell-off in global semiconductor and artificial-intelligence stocks.
TSMC Reports Record Q2 Revenue and Profit
TSMC reported consolidated revenue of NT$1.27 trillion, equivalent to about $40.2 billion, for the second quarter of 2026.
Revenue increased 36% from the same period a year earlier and about 12% from the previous quarter. The result reached the upper end of the company’s earlier revenue guidance of $39 billion to $40.2 billion.
Net profit rose 77.4% year over year and 23.4% from the previous quarter to a record NT$706.56 billion, or approximately $21.96 billion. Earnings per share increased to NT$27.25 from NT$15.36 a year earlier.
The company reported a gross margin of 67.7%, above its previous guidance range of 65.5% to 67.5%. Its operating margin reached 60.3%.
High-performance computing products accounted for 66% of TSMC’s quarterly revenue after increasing 20% from the previous quarter. The category includes artificial-intelligence accelerators, processors and other chips used in servers and data centers.
Smartphone-related products represented 22% of revenue.
Advanced Nodes Generate 77% of Wafer Revenue
TSMC recorded its first meaningful revenue contribution from its 2-nanometer manufacturing process during the quarter.
The 2nm process accounted for 3% of second-quarter wafer revenue. The company’s 3nm technology contributed 30%, while 5nm and 7nm technologies accounted for 33% and 11%, respectively.
Combined revenue from 7nm and more advanced manufacturing technologies accounted for 77% of total wafer revenue, up from 74% in the first quarter.
TSMC said its second-quarter performance was supported by strong demand for leading-edge process technologies. The company expects the production ramp of its 2nm process to continue during the third quarter.
TSMC Raises Q3 Guidance and 2026 Spending Plan
For the third quarter of 2026, TSMC expects revenue of between $44.6 billion and $45.8 billion.
The midpoint of the range, $45.2 billion, would represent an increase of about 12% from the second quarter.
TSMC expects its third-quarter gross margin to range from 65% to 67%, while its operating margin is projected at between 56% and 58%.
The company also raised its 2026 capital-expenditure forecast to between $60 billion and $64 billion, up from its previous range of $52 billion to $56 billion.
About 70% to 80% of the budget is expected to support advanced manufacturing technologies. Approximately 10% will go toward specialty technologies, while the remaining 10% to 20% will fund advanced packaging, testing, photomasking and related operations.
Management also said capital spending over the next three years is expected to be significantly higher than spending during the previous three-year period.
Planned U.S. Investment Rises to $265 Billion
TSMC has committed an additional $100 billion to its Arizona operations, raising its total planned U.S. investment to $265 billion from $165 billion.
The expanded plan could support four additional manufacturing facilities, although the timing and final configuration of those projects will depend on market conditions and construction progress.
TSMC Chief Financial Officer Wendell Huang said the company’s first Arizona fabrication plant is operational and producing yields comparable to those achieved at its leading facility in Taiwan.
The second Arizona plant is preparing to receive production equipment, while construction of a third plant is underway. Preliminary work has also started on a fourth fabrication plant and Arizona’s first advanced-packaging facility.
According to Huang, TSMC’s current and planned Arizona footprint will include 12 fabrication and advanced-packaging facilities, as well as a research and development center.
He said the company continues to see strong, multi-year customer demand but identified construction-worker availability and infrastructure capacity as challenges affecting the Arizona expansion.
TSMC is also building 13 leading-edge manufacturing and advanced-packaging facilities in Taiwan.
Huang said the company’s newest technologies will continue to be developed and initially scaled in Taiwan before being transferred to overseas facilities.
TSMC Shares Rebound After Sharp Decline
TSMC’s Taiwan-listed shares fell 7.29% on July 17, closing at NT$2,290.
The decline came as investors reacted to the company’s higher capital-spending plans and lower third-quarter margin guidance. The stock was also affected by a broader global sell-off in semiconductor and artificial-intelligence shares.
On July 20, TSMC shares recovered 1.31% to close at NT$2,320, even as Taiwan’s Taiex benchmark declined 0.52% to 42,449.70.
TSMC’s advance reduced the broader index’s decline by about 240 points, according to Taiwan’s Central News Agency. Foreign institutional investors nevertheless remained net sellers in the Taiwanese market.
In U.S. trading, TSMC’s American depositary receipts were priced at $401.59 at 10:52 a.m. Eastern Time on July 20, up approximately 0.81% from the previous close. The shares had traded between $400.50 and $409.78 during the session.
TSMC’s latest report showed record quarterly revenue and profit, margins above its previous guidance, a stronger full-year growth outlook, higher capital spending and an expanded U.S. manufacturing commitment.
The company’s next quarterly report is expected to provide further details on the 2nm production ramp, margin trends and execution of its revised capital-spending program.
