TAIPEI, July 26, 2026, 06:08 GMT+8
- Taiwan shares closed at NT$2,350 on Friday, falling 2.3% that session but rising 2.6% over the week. The ADR ended at $403.41, slipping 2.9% on Friday, yet advancing 1.3% for the week.
- The midpoint of third-quarter revenue points to a sequential rise of 12.4%. The midpoint for gross margin is down by 1.7 percentage points.
- Cashed markets in Taiwan and the U.S. are shut. Attention next week turns to a Federal Reserve policy decision and key technology sector earnings releases.
Taiwan Semiconductor Manufacturing Co (TPE:2330; NYSE:TSM) finished the week higher after choppy trading. U.S. shares rose 1.3% overall even as they fell 2.9% on Friday. The stock listed in Taiwan climbed 2.6% over the week.
The key figure is 3%. TSMC’s 2-nanometer process accounted for 3% of wafer revenue in the second quarter. The company projects the process ramp will reduce gross margin by three to four points in the second half.
The disparity sheds light on the stock’s turnaround. The ADR surged 5.6% on Tuesday following news of price increases for 2027, but then dropped 5.0% by Friday.
According to two sources who spoke with Reuters, TSMC intends to raise prices by as much as 10%. The adjustments are expected to address costs for materials, equipment, and construction of overseas fabrication plants. TSMC would not comment on exact pricing. The company described its pricing strategy as “strategic, not opportunistic.” Reuters
| Investor measure | Base | Latest or guidance midpoint | Change |
|---|---|---|---|
| ADR weekly close | $398.37 as of July 17 | $403.41 as of July 24 | +1.3% |
| ADR after Tuesday rally | $424.61 as of July 21 | $403.41 as of July 24 | -5.0% |
| Revenue | $40.20 billion, Q2 result | $45.20 billion, Q3 projection midpoint | +12.4% |
| Gross margin | 67.7%, actual for Q2 | 66.0%, Q3 projection midpoint | -1.7 points |
| Operating margin | 60.3%, Q2 actual | 57.0%, Q3 forecast midpoint | -3.3 points |
Third-quarter numbers represent the midpoint of the company’s outlook. Share price changes reflect unadjusted closing values.
The table outlines the investor trade-off. TSMC anticipates another significant increase in sales. Despite this growth, profitability is projected to decline.
Revenue for the third quarter is projected at $44.6 billion to $45.8 billion, marking sequential growth of roughly 12% at the midpoint. Gross margin is expected in the range of 65% to 67%.
The ramp-up of 2nm technology is a key source of pressure. Additional headwinds come from overseas facilities. TSMC anticipates an initial overseas-fab margin dilution of two to three points, potentially increasing to three to four points over time.
TSMC increased its capital budget for 2026 to a range of $60 billion to $64 billion, with around 70%-80% allocated for advanced-process technologies. The company’s management continues to anticipate full-year revenue in dollar terms to rise a bit above 40%.
The company’s core operations stayed robust. Net income for the second quarter rose 77.4% to NT$706.56 billion. Advanced technologies accounted for 77% of wafer revenue.
Overall, the data suggest the announced pricing strategy has a defensive tone. Raising prices may help safeguard profits as capital spending rises. However, it does not eliminate short-term margin pressure. That conclusion follows from the firm’s outlook and updates on pricing negotiations.
Chief Executive C.C. Wei emphasized customer stability rather than sudden growth. “I don’t want to squeeze them out from the market,” he said. Wei added that TSMC depends on its customers’ ongoing success.
On Friday, broader concerns resurfaced. The Philadelphia Semiconductor Index fell 4.5%. Shares of Intel NASDAQ:INTC declined 7.9% even after the company projected improved quarterly results. The ADR of TSMC registered a smaller drop.
Peter Andersen, CEO of Andersen Capital Management, described the concerns directly. “The fear of missing out is becoming more like a fear of massive overbuilding,” he said. Reuters
The Federal Reserve is set to announce its decision on Wednesday next week. Leading technology firms are also scheduled to disclose their quarterly earnings. Their plans for capital expenditures will be closely watched as an indicator of advanced-chip demand.
TSMC is not set to announce any financial results next week. The company’s sales figures for July will be released on August 10. In the meantime, updates from customers on spending are likely to be the main driver for the stock.
Risks: A more rapid deceleration in AI spending may lower factory utilization rates. Costs associated with the N2 ramp, margin dilution from overseas fabs and fluctuations in currency could also impact margins.
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