Taipei, July 16, 2026, 16:22 (UTC+8)
- Operating income for the second quarter was up 65.4% as wafer shipments climbed 16.6%. The blended profit-per-wafer proxy was up around 42%.
- High-performance computing made up about 83% of the year-on-year revenue growth, using the company’s rounded platform shares.
- TSMC hiked its 2026 capital spending outlook to $60 billion-$64 billion and said it now sees dollar revenue growth just over 40%.
Taiwan Semiconductor Manufacturing Co (TPE:2330; NYSE:TSM) reported a 16.6% boost in second-quarter wafer shipments, but operating income soared 65.4%. The numbers point to AI demand pushing up profit per unit, with operating income per 12-inch-equivalent wafer at around NT$177,000, up 42% from last year. That’s outpacing the firm’s efforts to add more capacity.
The conversion rate carries more weight than the 77.4% jump in net income. Revenue climbed 36% to NT$1.270 trillion, with profit hitting a record NT$706.56 billion—roughly 12% over the LSEG SmartEstimate. Gross margin came in at 67.7%, a level not seen in over 20 years. TSMC shares were up 59% for the year. Taipei finished regular trading before the company released results.
TSMC’s rounded platform numbers suggest an even tighter engine. High-performance computing, counted as HPC and covering server and AI accelerator chips, brought in about NT$838 billion, jumping around 50%. That figure made up some NT$278 billion, or around 83%, of TSMC’s total year-on-year sales bump. Smartphone revenue managed 11% growth, though its share dropped five points. So far it’s more concentration than a handset crash.
| Operating conversion | Q2 2025 | Q2 2026 | Change |
|---|---|---|---|
| Wafer shipments, million 12-inch equivalents | 3.718 | 4.336 | +16.6% |
| Revenue, NT$ billion | 933.79 | 1,270.38 | +36.0% |
| Gross profit, NT$ billion | 547.37 | 860.31 | +57.2% |
| Operating income, NT$ billion | 463.42 | 766.60 | +65.4% |
| Revenue per shipped wafer | NT$251,000 | NT$293,000 | +16.7% |
| Operating income per shipped wafer | NT$125,000 | NT$177,000 | +41.8% |
The per-wafer numbers are rough estimates based on overall company data, and aren’t actual average wafer selling prices released by the company.
The gap between net and operating profit is clear. TSMC reported NT$63.2 billion in gains from selling and revaluing a minority stake in another foundry, making up 7.3% of pretax income. Excluding that boost, factory profit was still up 65.4%. Lower operating expenses—down to 7.8% of revenue from 9.1%—helped that jump.
HPC made up 66% of revenue, compared to 60% at this time last year. Advanced process chips brought in 77% of wafer revenue. 2-nanometer tech, the company’s latest, chipped in 3% for the first time, while 3-nanometer accounted for 30%. “Our business in the second quarter was supported by strong demand for our leading-edge process technologies,” Chief Financial Officer Wendell Huang said.
| Mix and outlook | Q2 2025 | Q2 2026 | Q3 2026 guidance |
|---|---|---|---|
| Revenue came in at $30.07 billion in Q2 2025. Q2 2026 revenue hit $40.20 billion. Q3 2026 is guided to $44.6 billion to $45.8 billion. | 30.07 | 40.20 | 44.6-45.8 |
| Gross margin was 58.6% for Q2 2025. Q2 2026 gross margin rose to 67.7%. Guidance for Q3 2026 is 65% to 67%. | 58.6% | 67.7% | 65%-67% |
| Operating margin for Q2 2025 was 49.6%. For Q2 2026, operating margin moved up to 60.3%. Guidance for Q3 2026 is 56% to 58%. | 49.6% | 60.3% | 56%-58% |
| HPC made up 60% of revenue in Q2 2025 and 66% in Q2 2026. No Q3 2026 guidance was given for HPC share. | 60% | 66% | — |
| Advanced-node, meaning 7 nm and smaller, accounted for 74% of revenue in Q2 2025 and 77% in Q2 2026. Q3 2026 data was not provided. | 74% | 77% | — |
| 2-nanometer processes were not used in Q2 2025 but made up 3% by Q2 2026. Q3 2026 line was left blank for this. | 0% | 3% | — |
TSMC leads gains in platform and tech stocks.
If TSMC hits the $45.2 billion revenue midpoint in the third quarter, that would be up about 37% year over year and 12% up from the previous quarter. Margin forecasts are softer—midpoint guidance calls for gross margin to fall 1.7 points and operating margin to drop 3.3 points. CEO Huang flagged a sharp 2-nanometer ramp, which he said could cut gross margin by 3 to 4 points in the back half, until gains in productivity and cost help offset some of that.
Management now sees full-year dollar revenue growing a bit over 40%, up from its earlier guide of more than 30%. The company also bumped capital spending to a range of $60 billion to $64 billion, raising the minimum by 7% over the old top end of $56 billion. A fresh $100 billion investment in Arizona brings announced U.S. spending to $265 billion. Management isn’t playing it safe with this capacity plan.
The cash-flow statement gives the picture. TSMC put NT$496 billion ($15.7 billion) into capital projects for the quarter. Free cash flow, which is cash from operations minus those outlays, was NT$287.36 billion. That’s down 17% from the previous quarter but still 44% higher than last year. Inventory days were up at 87, compared to 76, mostly due to the scale-up for 2-nanometer chips. The company is paying now, before the new plants start to bring in sales.
“TSMC’s strong second-quarter revenue shows AI demand is still solid,” TriOrient analyst Dan Nystedt said before the results, noting advanced production and CoWoS, which connects processors with high-bandwidth memory. CEO C.C. Wei told analysts later, “Our packaging capacity is so tight that now it’s limiting my customers’ growth.” Reuters
The bull case depends on AI demand holding up, data-centre builds getting power and finishing on time, 2-nanometer costs dropping and foreign plants not dragging on margins more than forecast. Wei said he still sees strong demand into 2029 or 2030, though there might be a dip along the way. With the stock already 59% higher this year, the market will watch if the expected 42% profit-per-wafer jump keeps pace with TSMC’s growing global factory expense.
