TSMC — 2026Q4 earnings

“HSINCHU, Taiwan, R.O.C., Oct. 15, 2026 -- TSMC (TWSE: 2330, NYSE: TSM) today announced consolidated revenue of NT$1,494.24 billion, net income of NT$763.06 billion, and diluted earnings per share of NT$29.43 (US$4.60 per ADR unit) for the third quarter ended September 30, 2026.”

“Year-over-year, third quarter revenue increased 50.9%, while net income and diluted EPS both increased 68.7%. Compared to second quarter 2026, third quarter results represented a 17.6% increase in revenue and an 8.0% increase in net income.”

“In US dollars, third quarter revenue was $46.72 billion, which increased 41.2% year-over-year and increased 16.2% from the previous quarter. Gross margin for the quarter was 66.4%, operating margin was 58.7%, and net profit margin was 51.1%.”

“Net Revenue (US$ billions) 46.72 44.6-45.8 40.20 33.10 +16.2% +41.2% Net Revenue 1,494.24 1,270.38 989.92 +17.6% +50.9% Gross Margin 66.4% 65.0%-67.0% 67.7% 59.5% -1.3 ppts +6.9 ppts Operating Expenses (116.43) (98.98) (87.76) +17.6% +32.7% Operating Margin 58.7% 56.0%-58.0% 60.3% 50.6% -1.6 ppts +8.1 ppts”

“Income from operations 876,445 500,685 75.0 766,603 14.3 Income before tax 911,039 525,369 73.4 862,430 5.6 Net income 763,064 452,302 68.7 706,562 8.0”

“Non-Operating Items 34.59 95.83 24.68 -63.9% +40.1% Net Income Attributable to Shareholders of the Parent Company 763.06 706.56 452.30 +8.0% +68.7% Net Profit Margin 51.1% 55.6% 45.7% -4.5 ppts +5.4 ppts”

“In the third quarter, shipments of 2-nanometer accounted for 8% of total wafer revenue; 3-nanometer accounted for 33%; 5-nanometer accounted for 28%; and 7-nanometer accounted for 10%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 79% of total wafer revenue.”

““Our business in the third quarter was supported by strong demand for our leading-edge process technologies,” said Wendell Huang, Senior VP and Chief Financial Officer of TSMC. “Moving into fourth quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies, including the steep ramp-up of our 2-nanometer technology.””

“Based on the Company’s current business outlook, management expects the overall performance for fourth quarter 2026 to be as follows: • Revenue is expected to be between US$52.3 billion and US$54.3 billion; And, based on the exchange rate assumption of 1 US dollar to 31.8 NT dollars, • Gross profit margin is expected to be between 65% and 67%; • Operating profit margin is expected to be between 56.5% and 58.5%.”

“Based on our current business outlook, management expects: ▪ 2026 revenue to increase by around 44% in US dollar terms”

“Gross margin decreased by 1.3 percentage points sequentially to 66.4%, primarily due to margin dilution from 2-nanometer ramp.”

“HPC increased 22% quarter-over-quarter to account for 68% of our third quarter revenue. Smartphone increased 10% to account for 21%. IoT increased 5% to account for 4%. Automotive increased 23% to account for 4%. While DCE declined 12% to account for 1%.”

“during the third quarter, we generated about TWD920 billion in cash from operations, spent TWD443 billion in CapEx, and distributed TWD156 billion for fourth quarter 2025 cash dividends. Overall, our cash balance increased TWD488 billion to TWD3.6 trillion at the end of the quarter. In US dollar terms, our third quarter capital expenditures totaled USD13.8 billion.”

“we expect our fourth quarter revenue to be between USD52.3 billion and USD54.3 billion, which represents a 14% sequential increase or a 58% year-over-year increase at the midpoint.”

“We have just guided our fourth quarter gross margin to decrease by 40 basis points to 66% at the midpoint, primarily due to the continued margin dilution from the steep ramp-up of our 2-nanometer technology, as well as dilution from overseas fabs. These impacts are expected to be partially offset by cost improvement efforts, including productivity gains and across-node capacity optimization.”

“we now expect the gross margin dilution from the ramp-up of our overseas fabs to be closer to 2% for the full year 2026. As we put more effort to support the strong structural demand from our customers, more fabs will be ramping up in the US. Thus, we expect the dilution from our overseas fabs to widen to 3% to 4% in the next few years.”

“Looking ahead, we continue to observe consumer and price-sensitive end market segments are being challenged due to the impact of rising component prices and more economic uncertainties. As such, we are being prudent in our business planning going into 2027, while focusing on the fundamentals of our business to further strengthen our competitive position. Having said that, demand for our leading-edge technologies continues to be extremely robust, supported by our strong technology differentiation and broader customer base. Therefore, we now expect our full year 2026 revenue growth to be around 44% year-over-year in US dollar terms.”

“Given the continued robust multiyear demand from our customers, including the emerging agentic AI market, we reiterate our full year 2026 capital budget to be between USD60 billion and USD64 billion. We continue to expect our CapEx dollars investment from 2026 to 2028 and to be even more significantly higher than the past three years, as we continue to invest heavily to support our customers' growth.”

“The tool price inflation is real. The tool price, material, labor costs, et cetera. However, the majority of the CapEx is always related to the long-term demand. So that will be the composition going forward. And capital intensity-wise -- as we always said, if we do our job right, the increase in revenue will outpace the increase in CapEx, and that is still the case from what we are looking at.”

“And let me share with you, we put every possibility we can, talking about the CSPs, CapEx, data centers’ build-out, financial, power supply, and also other components’ supply, et cetera, into our consideration. And so we make our own judgment -- and then based on our assessed demand, we still think the demand is higher than the supply, and we are working very hard to narrow the gap.”

“Laura, all I can say right now is the demand is very extremely robust, okay? And we did not see any sign of slowdown whether it's high 50% CAGR, it doesn't matter, it probably will be higher.”

“TSMC is expanding at an unprecedented pace with nearly 20 fabs worldwide in progress. We are building 13 leading edge and advanced packaging fabs in Taiwan over the next several years, and another five to six fabs overseas.”

“We expect our N2 family technology’s annual capacity to more than double in 2027, supported by strong demand from both smartphone and HPC/AI applications. We are also leveraging our manufacturing excellence to generate more N2 wafer output, further increasing our capacity support to customers. In addition, we have already begun preparing the capacity for our A14 technology. Risk production is well on track for 2027, and volume production will start in 2028.”

“So recently, we did expand our capacity’s consideration to see outside Arizona where we can get another chance to expand our capacity. That Texas is one. So we send the teams to Texas to do all the evaluation. And we also talk to one of our customers who try to build a fab, Terafab, let me be more specific. And we discussed with them to see whether that we can be utilizing that actual capacity also. So we're still in discussion.”